During an IPO, what typically occurs with the company’s shares?

During an IPO, shares of the company are sold to the public at the public offering price. This is the price set for the initial sale of shares and is typically established through discussions between the company and its underwriters. The goal is to set a price that balances maximizing capital raised with attracting enough interest from investors to sell the shares.

When the shares are made available to the public, it allows individual investors, alongside institutional investors, to purchase them. The shares can then be traded on the stock market shortly after the IPO, reflecting real-time fluctuations in supply and demand. This public access to shares is a vital aspect of the IPO process, as it helps to establish a market for the company’s stock and facilitates liquidity for its investors.

The other options do not capture the full scope of what happens during an IPO. For instance, options that suggest exclusivity to institutional investors or price fixation do not accurately depict the inclusivity and market mechanics of the process. Additionally, shares becoming available for trading only after a year is incorrect since they typically begin trading immediately after the IPO.