Understanding IPOs and FPOs

What is the primary purpose of an Initial Public Offering (IPO)?

• To repay existing loans

• To acquire another company

• To raise capital by offering shares to the public

• To pay dividends

In a Book Building process, what does the price band indicate?

• The fixed price of shares

• The minimum and maximum price range for bidding

• The market price of shares after listing

• The government-determined floor price

What differentiates an FPO from an IPO?

• FPO is for new companies, IPO is for listed ones

• IPO is done by private companies; FPO by listed companies

• IPO is smaller than FPO

• FPO has no regulatory oversight

Who can participate in an Offer for Sale (OFS)?

• Only retail investors

• Only promoters and employees

• Promoters and major shareholders to sell shares to the public

• Only foreign institutional investors

In book building, the final issue price is determined by ...

• The company's board

• SEBI

• The stock exchange

• Investorr bids and book runners' analysis

What is the minimum reservation percentage for retail investors in an IPO?

• 10%

• 25%

• 35%

• 50%

What is the role of a 'Book Running Lead Manager' (BRLM)?

• To regulate the IPO

• To price the shares after listing

• To manage and underwrite the IPO/FPO process

• To buy shares from promoters

In an OFS, what is the typical minimum holding period promoters must satisfy before selling shares?

• 6 months

• 1 year

• 2 years

• No such requirement

What does 'anchor investor' mean in an IPO?

• An investor who launches the IPO

• A small investor who applies on Day 3

• A qualified institutional investor who is allotted shares before the issue opens

• A retail investor given preference in allocation

What is the maximum investment limit for a retail investor in an IPO as per SEBI rules (as of 2024)?

• ₹1 lakh

• ₹2 lakhs

• ₹5 lakhs

• ₹10 lakhs