Question : What is the purpose of an initial public offering (IPO)?
Option 1: To issue debentures
Option 2: To raise funds from existing shareholders
Option 3: To list a company's shares on a stock exchange
Option 4: To merge with another company
Correct Answer: To list a company's shares on a stock exchange
Solution : The correct answer is (c) To list a company's shares on a stock exchange.
The purpose of an Initial Public Offering (IPO) is to enable a company to list its shares on a public stock exchange for the first time. An IPO is the process through which a privately-held company offers its shares to the public for the first time, allowing investors to buy and trade those shares on a stock exchange. By going public through an IPO, a company gains access to the public capital markets and lists its shares on a recognized stock exchange. This provides the company with increased visibility, liquidity for its shareholders, and the ability to raise capital by selling shares to the public.
