When a company raises money from public for the first time it is known as ________________.
Last updated Jun 24, 2026
Correct Answer:
Option B —
initial public offer
An IPO is the process by which a private company becomes a public company by offering its shares to the general public for the first time. This allows the company to raise significant capital for expansion, while the founders and early investors can transition their private shares into public ones.
Why the other options don't fit:
A) Private placement: This is the opposite of a public offer. The company sells shares to a small, select group of private investors (like insurance companies or pension funds) rather than the general public.
C) Further public offer (FPO): This happens when a company that is already listed on the stock exchange issues additional shares to the public to raise more money.
D) Green shoe option: This is a specific clause in an underwriting agreement that allows the underwriters to sell more shares than originally planned if there is high demand. It’s a tool for price stability, not the name of the offering itself.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.
