investment bank. (link to underpricing??) Underpricing refers to the first trading day closing price typically exceeds price at which the shares were offered to the public. Over 20 years‚ researchers investigated the underpricing puzzle associated with initial public offerings (IPOs). Ibboston1975‚ Ibbostson and Jaffe 1975 and Ritter 1984‚ among others‚ all document convincing evidence that initial public offerings are‚ on average underpriced. There are sufficient evidence of underpricing in UK (increase
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Should people be concerned of the food they consume daily? What exactly‚ is food? New Oxford Dictionary Second Edition calls it “any nutritious substance that people or animals eat or drink‚ or that plants absorb‚ in order to maintain life and growth.” That doesn’t help so much unless you define nutritious. Nutritious food‚ it says here‚ “provides those substances necessary for growth‚ health‚ and good condition.” Many people nowadays does not too concerned on the food they consume. According to
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SHOULD WE BE CONCERNED ABOUT THE GREENHOUSE EFFECT? The greenhouse effect‚ by definition is the process by which the atmosphere is assailed by an excess of carbon dioxide. What happens is that carbon dioxide released in large quantities by industry collects at the lower part of the earth ’s upper atmosphere. Because of this‚ part of the heat that is reflected from the earth is absorbed by this carbon dioxide and returned to the earth as heat. This shield‚ so to speak‚ lets the sunlight through
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average‚ too large to be explained away by error in auditing practices. If this were the case‚ then an auditing firm or investment bank would also error on the side of overpricing the stock. Various theories have come to the forefront of this IPO underpricing debate‚ most of them explaining the pricing of a company’s stock in an IPO in terms of signaling effects as opposed to the fundamental characteristics of the firm and why a risk averse investment bank would be more likely to underprice a stock
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software program that gave rise to the notion of "surfing" (Netscape ’s). Netscape Communications can trace its roots to a group of science students working at the University of Illinois at Urbana-Champaign who turned a simply software program called ’Mosaic ’‚ into a platform that enabled non-technical computer users to access and retrieve information that was becoming more and more available on the worldwide web. Founded in 1994‚ Netscape Communications Corporation provides a comprehensive line of
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Corporate Finance: Case Netscape 1. Why has Netscape been so successful to date? What is its strategy? How risky is its current competitive situation? Netscape follows a “give away today make money tomorrow”-strategy. Netscape currently has 75% of web browser market‚ making it by far the most popular browsing software. Netscape is making money by selling server software to companies that require marketing access to potential consumers‚ by selling its software packages and through providing
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in an initial public offering then the stock is called a hot issue. Netscape Communications (NSCP) was the classic hot issue. It went public August 9‚ 1995 at an offer price of $28. On the same day it hit a high of $74¾ and closed at $58¼. Netscape hit an all time high of $174 in December 1995 and split 2:1 February 7‚ 1996. In the long term‚ however‚ Netscape wasn’t that hot an issue. A year after the initial public offer Netscape Communications was trading below $30 a share. (Adjusted for the split
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This case is about Netscape Initial Public Offering (IPO) in 1995. Netscape had a successful starting in the market mainly because of their strategy of “Give away today and make money tomorrow”‚ which let them capture 75% of the web browser market‚ making it the most popular browsing software. The successful strategy consists in gaining its large market share by initially giving away its product for free. Netscape had to create a new industry standard to succeed in the long term‚ besides make revenues
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------------------------------------------------- Top of Form Netscape IPO Introduction The case analyzes the Initial Public Offering (IPO) of Netscape Communications Inc.‚ in order to recommend a justifiable share price for the IPO. Founded in April 1994‚ Netscape Communications Corporation provided a comprehensive line of client‚ server and integrated applications software for communications and commerce on the Internet and private Internet Protocol networks. The primary revenue generator for Netscape at the time IPO was it ’s
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2. Netscape Valuation. In the process of raising capital by issuing stock to the public a crucial moment is to determine the company’s share price that best reflects the real value of the company. In our analysis in order to estimate the fair value of Netscape’s share price we have applied the Weighted Average Cost of Capital Method of Valuation. The WACC method implies that the firm’s weighted average cost of capital represents the average return that the company must pay to its investors‚ both
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