What is IPO?

An IPO (initial public offer) is a private firm (one owned by a small group of individuals, or maybe even a collective) lists its company on a stock exchange by selling shares through an underwriter (a bank) or group of underwriters to the public. If the company is desirable to the public will buy all of the shares, or there may even be more applications for shares than there are shares for sale ('oversubscribed'). If the shares offered to the public are not popular enough to find buyers for every one of the, then the remaining shares will be purchased automatically by the underwriter.