Why do company manager-owners smile when they ring the stock exchange bell at their IPO?

A. Manager-owner are freed of burden of managing their company.

B. An IPO reveals the value of the manager-owners' value.

C. Managers owners receive their first stake in the company at an IPO.

D. An IPO's price goes up on the first day, generating guaranteed returns for investors.

Company manager-owners smile when they ring the stock exchange bell at their IPO because;

C. Managers owners receive their first stake in the company at an IPO.

Explanation:

An IPO termed Initial Public Offering is the process by which shares from a private corporation are offered to the public in a new issuance of stock. By offering stocks to the public, the corporation has an opportunity to raise capital from the buying of their stock. This capital raises the corporations value and therefor the private investors can finally realize gains from their investment. At the same time, an IPO members of the public can also participate in stock investment. Before a company issues an IPO, they have to select the underwriters and the rate at which the shares will be purchased.

A boom in the IPOs is always an indicator of an uptrend in that particular sector of the economy. For example during the technological boom, IPOs from technological company's was an uptrend indicating that the company's needed to raise capital from the public. Subsequently, the public also wanted the opportunity to own a share of the private corporations. Consequently, the number of IPOs in was on a downtrend during the 2008 financial crisis.

By issuing an IPO, the managers owners receive their first stake in the company.