Initial public offering

A company that is big enough to be able to sell stocks to the public would be able to do so in an initial public offering. The term simply means that this is the first time the company made its stock available for trading in public stock exchanges such as the New York Stock Exchange or the NASDAQ. Depending on the type of company, whether speculative or not, IPOs are generally risky as the first few days could see a significant drop in price. On the other hand, most IPOs of promising new companies do rise in value.

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