Underpricing
Underpricing refers to Initial Public Offering that is offered at price lower than its market value.
IPOs are often underpriced because of uncertainty about the level at which the issue will trade. Issuers are constrained to sell the stock below its market value in order to encourage investors to enter the IPO, but stock will be underpriced only temporarily because the laws of demand and supply will drive the price to its intrinsic value.
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