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Initial Public Offering IPO Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM INVESTMENT INTERVIEW QUESTIONS INITIAL PUBLIC OFFERING IPO INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Initial Public Offering IPO Interview Questions & Answers - Learning Mode

An initial public offering (IPO) is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. After the IPO, when shares trade freely in the open market, money passes between public investors. Although IPO offers many advantages, there are also significant disadvantages, chief among these are the costs associated with the process and the requirement to disclose certain information that could prove helpful to competitors. The IPO process is colloquially known as going public.

Try Initial Public Offering IPO Interview Questions & Answers - Exam Mode

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Initial Public Offering IPO Interview Questions & Answers - Learning Mode
Try Initial Public Offering IPO Interview Questions & Answers - Exam Mode
Question: What are Risk Factors in an IPO document?

Answer: Here, the IPO issuer's management gives its view on the Internal and external risks faced by the company. Here, the company also makes a note on the forward-looking statements. This information is disclosed in the initial pages of the document and it is also clearly disclosed in the abridged prospectus. It is generally advised that the investors should go through all the risk factors of the company before making an investment decision. Source: CoolInterview.com
Question: Who is eligible for reservation and how much? (QIBs, NIIs, etc.,)

Answer: In a book built issue allocation to Retail Individual Investors (RIIs), Non Institutional Investors (NIIs) and Qualified Institutional Buyers (QIBs) is in the ratio of 35: 15: 50 respectively. In case the book built issues are made pursuant to the requirement of mandatory allocation of 60% to QIBs in terms of Rule 19(2)(b) of SCRR, the respective figures are 30% for RIIs and 10% for NIIs. This is a transitory provision pending harmonization of the QIB allocation in terms of the aforesaid Rule wi Source: CoolInterview.com
Question: Does SEBI tag make my money safe for investing in an IPO?

Answer: For a public issue, you can know the status by calling the registrar (you will know about the registrar on the Highlights Page of the issue) after 30 to 40 days from the closing date of the issue. However, in a book building issue, you can know the status by calling the registrar after 20 days from the closing date. Source: CoolInterview.com
Question: What is a Cut Off Price for an IPO?

Answer: In Book building issue, the issuer of an IPO is required to indicate either the price band or a floor price in the red herring prospectus. The actual discovered issue price can be any price in the price band or any price above the floor price. This issue price is called "Cut off price". This is decided by the issuer and LM after considering the book and investors' appetite for the stock. SEBI (DIP) guidelines permit only retail individual investors to have an option of applying at cut off pr Source: CoolInterview.com
Question: What are the dos and don'ts for bidding / applying in the IPO issue?

Answer: The investors are generally advised to study all the material facts pertaining to the issue including the risk factors before considering any investment. They are strongly warned against any 'tips' or relying on news obtained through unofficial means. Source: CoolInterview.com
Question: Can a retail investor also bid in a book-built issue of an IPO?

Answer: Yes. He can bid in a book-built issue for a value not more than Rs.1,00,000. Any bid made in excess of this will be considered in the HNI category. Source: CoolInterview.com
Question: What is the difference between ''Block deal' and 'Bulk deal'?

Answer: Block deal is a trade, with a minimum quantity of 5,00,000 shares or minimum value of Rs. 5 crores, executed through a single transaction, on the special "Block Deal window".

Bulk deal is a trade, where total quantity bought or sold is more than 0.5% of the number of equity shares of the company.

The orders in a block deal are not shown to the people who trade from normal trade window. Bulk orders, on the other hand, are visible to everyone. Source: CoolInterview.com
Question: What Bankers of an IPO does in case of an IPO issue?

Answer: Bankers to the issue, as the name suggests, carries out all the activities of ensuring that the funds are collected and transferred to the Escrow accounts. The Lead Merchant Banker shall ensure that Bankers to the Issue are appointed in all the mandatory collection centers as specified in DIP Guidelines. The LM also ensures follow-up with bankers to the issue to get quick estimates of collection and advising the issuer about closure of the issue, based on the correct figures. Source: CoolInterview.com
Question: What is a Rights Issue for an IPO?

Answer: Rights Issue (RI) is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders unless they do not intend to subscribe to their entitlements. Source: CoolInterview.com
Question: How long will it take after the issue for the shares to get listed?

Answer: The listing on the stock exchanges is done within 7 days from the finalization of the issue. Ideally, it would be around 3 weeks after the closure of the book built issue. In case of fixed price issue, it would be around 37 days after closure of the issue. Source: CoolInterview.com
Question: How does SEBI ensure compliance with Disclosures and Investor protection?

Answer: The Merchant Banker are the specialized intermediaries who are required to do due diligence and ensure that all the requirements of DIP are complied with while submitting the draft offer document to SEBI. Any non compliance on their part, attract penal action from SEBI, in terms of SEBI (Merchant Bankers) Regulations. The draft offer document filed by Merchant Banker is also placed on the website for public comments. Officials of SEBI at various levels examine the compliance with DIP guidelines Source: CoolInterview.com
Question: Which members will be allowed to participate in book building of issue?

Answer: Book Running Lead Manager appointed by the issuer will intimate to the exchange the list of members who are eligible to participate in the issue. These members will be allowed to enter the bids in the IPO. Source: CoolInterview.com
Question: What is firm allotment in an IPO?

Answer: A company making an IPO issue to public can reserve some shares on "allotment on firm basis" for some categories as specified in DIP guidelines. Allotment on firm basis indicates that allotment to the investor is on firm basis. DIP guidelines provide for maximum % of shares, which can be reserved on firm basis. The shares to be allotted on "firm allotment category" can be issued at a price different from the price at which the net offer to the public is made provided that the price at which the Source: CoolInterview.com
Question: What are the uses of Groynes?

Answer: The Central Listing Authority's , CLA, functions have been detailed under Regulation 8 of SEBI (Central Listing Authority) Regulations, 2003 (CLA Regulations) issued on August 21, 2003 and amended up to October 14, 2003. In brief, it covers processing applications for letter precedent to listing fromapplicants; to make recommendations to the Board on issues pertaining to the protection of the interest of the investors in securities and development and regulation of the securities market, inc Source: CoolInterview.com
Question: How many days is the issue open?

Answer: As per Clause 8.8.1, Subscription list for public issues shall be kept open for at least 3 working days and not more than 10 working days. In case of Book built issues, the minimum and maximum period for which bidding will be open is 3-7 working days extendable by 3 days in case of a revision in the price band. The public issue made by an infrastructure company, satisfying the requirements in Clause 2.4.1 (iii) of Chapter II may be kept open for a maximum period of 21 working days. As per clause Source: CoolInterview.com
Question: Who is eligible to be a Book Running Lead Manager (BRLM)?

Answer: A Merchant banker possessing a valid SEBI registration in accordance with the SEBI (Merchant Bankers) Regulations, 1992 is eligible to act as a Book Running Lead Manager to an issue. Source: CoolInterview.com
Question: Who is a Syndicate Member for an IPO?

Answer: The Book Runner(s) may appoint those intermediaries who are registered with the Board and who are permitted to carry on activity as an 'Underwriter' as syndicate members. The syndicate members are mainly appointed to collect and entire the bid forms in a book built issue. Source: CoolInterview.com
Question: What is minimum number of days for which bid should remain open in book building for an IPO?

Answer: Book should remain open for minimum of 3 working days for any IPO. Source: CoolInterview.com
Question: What is the role of a registrar in case of an IPO?

Answer: The Registrar finalizes the list of eligible allottees after deleting the invalid applications and ensures that the corporate action for crediting of shares to the demat accounts of the applicants is done and the dispatch of refund orders to those applicable are sent. The Lead manager coordinates with the Registrar to ensure follow up so that that the flow of applications from collecting bank branches, processing of the applications and other matters till the basis of allotment is finalized, dis Source: CoolInterview.com
Question: What are Legal and other information in an IPO?

Answer: Outstanding litigations and material developments, litigations involving the company and its subsidiaries, promoters and group companies are disclosed. Also material developments since the last balance sheet date, government approvals/licensing arrangements, investment approvals (FIPB/RBI etc.), all government and other approvals, technical approvals, indebtedness, etc. are disclosed while issuing an IPO. Source: CoolInterview.com

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