Capital Markets (ECM / DCM)
An interviewer asks: 'If underpricing is costly to issuers, why don't issuers just demand a higher offer price?' How do you answer?
Model answer
Issuers face a trade-off and information asymmetry. Pushing the price up risks a thin, fragile book, a broken deal, and a stock that trades down — damaging reputation and future capital access. Banks…
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