Undertaking Investment bank undertakes to issuing authority right?How it will minimize risk of investors?



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Because if the value of the share will decrease after a successful IPO investor will loose money. Facebook had an excellent IPO. After that value of face book decreased.

1 Answer(s)


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Most public investors have no clue how to analyze a company, asses a companys future earnings and potential. Hence investment banks with good reputation play that role to analyze the company, financials etc and offer an unbiased opinion to the investors. This way the investor is very well education and hence reduces risk. Of course there are many banks that have misused this trust and hence leading to loses.

It is true that FB lead to short-term loses to the IPO investors. However many people still believe that the future of FB is still promising and the shares may climb up significantly.