Answer the Question based on following case study.

Mr. Raj is working as finance Manager is Amaira Company. Company has a capital Base of ₹50 lacs of Equity shares of ₹100 each. Now Company wants to enter into a new project for which it requires capital of ₹40 lacs. There are two options available to him.First to invite subscription from public through issue of prospectus and second to go for long term borrowing by issuing debentures. But Issue of debentures will not be suitable as the rate of return of company is less than Interest Rate of debentures. So the final decision was to issue Equity shares.

Give the full form of IPO.

Initial Public Offer

The correct answer is option (4)- Initial Public Offer.

The full form of IPO is Initial public offer.

A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange. This is called an Initial Public Offer (IPO). SEBI registered brokers have to be appointed for the purpose of accepting applications and placing orders with the company. The issuer company should also appoint a registrar to the issue having electronic connectivity with the exchange.