Question : Statement 1: Initial Public Offering (IPO) involves issuing new securities to the public.
Statement 2: IPO is a method to buy back existing shares from shareholders.
Option 1: Statement 1 is true, and statement 2 is true.
Option 2: Statement 1 is true, but statement 2 is false.
Option 3: Statement 1 is false, and statement 2 is true.
Option 4: Statement 1 is false, and statement 2 is false.
Correct Answer:
Statement 1 is true, but statement 2 is false.
Solution : The correct answer is (b) Statement 1 is true, but statement 2 is false.
Statement 1 is true. An IPO is the first sale of stock by a private company to the public, and it involves issuing new shares to investors for the first time.
Statement 2 is false. An IPO is not a method to buy back existing shares; instead, it is a way for a company to raise capital by issuing new shares to the public for the first time.
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