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Initial Public Offerings (IPOs) are a gateway for companies to raise capital, but many investors struggle with unanswered questions. In this guide, we address the top 10 most-searched IPO questions on Google, from gray market premiums to lock-in periods. Whether you’re a beginner or a seasoned investor, this article will help you navigate IPOs confidently
1. What does IPO stand for?
International Purchase Order
Investor Profit Opportunity
Initial Public Offering
Internal Portfolio Option
✅ Correct Answer: IPO stands for Initial Public Offering, where a private company lists shares on a stock exchange for public trading.
2. What is a “grey market premium” in an IPO?
A government-regulated IPO discount
Unofficial trading price before listing
A penalty for late trading
A type of IPO scam
✅ Correct Answer: The grey market premium (GMP) reflects investor demand before the IPO lists. High GMP often signals strong listing gains.
3. How long is the lock-in period for IPO promoters?
1 month
6 months
1 year
No lock-in period
✅ Correct Answer: Promoters must hold shares for 1 year post-IPO to prevent sudden sell-offs.
4. What does “oversubscription” mean in an IPO?
Demand exceeds shares available
Shares sold below face value
IPO withdrawal by the company
A regulatory penalty
✅ Correct Answer: Oversubscription means investor demand surpasses available shares, leading to lottery-based allotments.
5. What is a “red herring prospectus”?
A warning about risky IPOs
Preliminary document without final pricing
Post-IPO audit report
Stock market crash indicator
✅ Correct Answer: The red herring prospectus discloses financials before final pricing. Analyze its risk factors section carefully.
6. Can retail investors get 100% allotment in an IPO?
Yes, if they apply early
No, depends on demand
Only for government IPOs
Yes, for all private IPOs
✅ Correct Answer: Retail investors rarely get 100% allotment due to high competition and oversubscription.
7. What is a “lot size” in an IPO?
Total shares offered
Minimum shares per application
Lock-in period duration
Brokerage fee structure
✅ Correct Answer: Lot size is the minimum shares you must bid for (e.g., 15 shares per lot).
8. How to check IPO allotment status?
Call stock exchange
Registrar website/broker platform
Email SEBI
Physical letter
✅ Correct Answer: Check status on portals like KFinTech or your demat account within 7 days.
9. What is “IPO underpricing”?
Selling above market value
Listing below true value
Regulatory violation
IPO cancellation
✅ Correct Answer: Underpricing creates listing day hype but may sacrifice long-term value.
10. Are IPOs better than secondary market stocks?
Depends on valuation
Always better
Never better
Only for long-term
✅ Correct Answer: IPOs can outperform if the company is undervalued. Compare with industry peers.
Master IPO Investing Today!
These top 10 IPO questions equip you to navigate public offerings confidently. For advanced strategies, explore our IPO Masterclass Guide.