Book building is widely considered the most efficient way to price securities

Many investment bankers work on IPOs

When a company undertakes an IPO, investment banks often buy many of the organization’s shares directly from the company, in order to sell the shares on the stock market. The bank stands to profit after marking up the shares.

An initial public offering or 'IPO' is the process of a private company becoming public by putting shares of the company on the stock market for purchase.

An initial public offering is how a private company becomes public

This milestone requires plenty of preparation, starting with the SEC's S-1 registration, revealing key details about the company's finances and strategy. Investment bankers set valuations, secure long-term investors, and finalize share pricing before the public launch. IPOs provide companies with significant capital, but also demand transparency and invite public scrutiny.

Companies pay multiple fees as part of the IPO process

When a company decides to approach IPO, it typically hires investment bankers—who earn about 7% of the IPO’s gross proceeds—to help set the organization’s target valuation range and schedule an IPO date. But that isn't the only fee associated with the IPO process.

It's difficult for individual investors to purchase IPO shares

Although the process of going public means the general public can invest in a company, the initial investment period is different. Before individual investors get in on the action, investment bankers sell the shares to larger financial institutions who can afford the asking price and risk associated with an IPO.

A list of public companies' filings

To go public, a company has to file a registration statement with the US Securities and Exchange Commission, also known as the SEC. You can find these filings on the SEC’s website to learn more about a company’s share pricing before its IPO date.

Read about the day Palantir went public in 2020

After more than 15 years in business, Palantir held its initial public offering (IPO) via a direct listing—meaning the company didn't rely on underwriters to assess the initial trading price or stock value. Palantir's stock ended the day trading 31% higher than the reference price.

Learn how to read a prospectus, the juicy document that any company must file with the SEC before going public.

Google had a quirky, auction-based IPO

In its sixth year, Google's shareholders reached a size where regulators would require the company to publicly report its financials. This prompted the company to go public through an unconventional style: the Dutch auction. The company auctioned its shares starting from a high price and dropping to a lower level.

The prices on prediction markets reflect how the collective forecasts future outcomes

On prediction markets, bettors bid up or down the price of contracts based on what they expect an event's outcome to be. Bettors bid up prices when they think an event is more likely to occur than the current contract price shows, so they buy the contracts, pushing the price higher. They bid down prices by selling these contracts when they believe an event is less likely to occur, driving the price down due to supply and demand.

Investors trading their municipal bonds can't use the same method to purchase them

Instead, they’ll have to go through the secondary market, which has its own set of rules and steps to follow. An illustrated, explanatory video can help you learn how to sell your municipal bonds for the best market value.

'Payment in kind' is a compensation method that uses alternatives to cash

Companies can make payments using goods, services, or additional securities instead of cash, helping companies preserve their cash flow. Public BDCs receive roughly 8% of their investment income via PIK.

Companies sometimes issue corporate bonds to raise capital

These bonds offer investors regular interest payments in addition to the return of the principal amount at maturity. They allow companies to raise capital without losing ownership.

Private companies are often harder to value than public companies

That's partly because there isn't readily available stock information, and financial accounting is kept behind closed doors. Typically, determining the value of a private company involves, among other things, closely comparing the private company with its competitors.

Open-end and closed-end funds differ in how they create and distribute shares

Open-end funds are able to create new shares on a daily basis, while closed-end funds have a set number of shares. This impacts the way shares are traded on the open market, and the way they’re priced.

Retail investors are average joes, while institutional investors often move billions of dollars a day

Retail investors often trade 100 shares at a time, while institutional investors trade 10,000 or more. The biggest difference is that, unlike retail investors, institutional investors are professionals who are trading someone else’s money.

Seed funding is often the first round of capital that a startup raises

Early-stage startups often try to secure seed funding from investors in order to take their idea from concept to reality.

Value investing is the strategy of buying assets you believe are worth more than their current price

Famed investor Warren Buffett is known for building his empire with this strategy, which he learned from his mentor Benjamin Graham.

Insider trading is the practice of trading a company's securities based on material, nonpublic information

"Material, nonpublic" information is essentially any undisclosed information that could have a substantial impact on an investor's decision to trade a security. While the practice is strictly prohibited on the stock market, it's now being discussed regarding less-regulated but increasingly popular prediction markets.

Watch how the S&P 500 is actually calculated

After accounting for each company's float-adjusted market capitalization (a metric that combines the price of a company's stock, the total number of shares, and the stock's float, which means how many shares are actually available), the S&P 500 formula uses a divisor to create the index number. However, what the divisor is and what it represents are secrets.

Bear raiding is a manipulative tactic to bring a stock price down—and part of why short selling can be controversial

Bear raids occur when short sellers use manipulative tactics—like spreading false rumors or coordinating trades—to artificially drive down a stock's price and profit from short positions. Although bear raids are an illegal form of market manipulation, they can spook investors, prompting large selloffs of shares and causing a company's value to plummet. As a result, investors may be hesitant to invest in the company in the future, creating a feedback loop of stock downturn.

Securitization has become common practice in home financing

When a homebuyer finances with a lender, they aren’t necessarily the one footing the bill. After a buyer secures a home loan, the lender can sell the loan to another financial institution or a private institution. That group can later sell that mortgage to investors. This is called securitization.

Hedge funds, the private investment firms that trade a wide swath of financial assets, make money by imposing steep fees on investors and from the fund's investment performance.

How literary agent Scott Meredith invented the modern book auction

Prior to the 1964 auction of "The Night Action" for $13,500 to New American Library, a gentleman's code persisted in the literary world: no manuscript should be shared with more than one publisher at a time. Meredith—the agent behind Norman Mailer, Carl Sagan, and Arthur C. Clarke—leveraged his deep knowledge of the talent pool to publishers, sending around manuscripts to 19 different publishers to generate a bidding war. The Beat-influenced novel eventually flopped and is now out of print.

Play a game that reveals if investors with a crystal ball make better trades

The "crystal ball" game reveals how well you would do trading stocks and bonds if you could see the front page of the Wall Street Journal one day in advance.

OPEC often intervenes to influence the price of oil

This guide explains how investing in oil works with in-depth explanations of each of the forces that control oil’s price. Oil is unique as a commodity in part because of OPEC’s role in regulating its price.

Why are books released in hardcover and paperback?

Publishers regularly release books in hardcover only to rerelease them in paperback a year later. It's a strategy that might seem counterintuitive. Why spend so much time on two separate releases? And why spend so much money on two individual products? This Reader's Digest article goes behind the scenes in the publishing industry to answer these questions and others, offering insight into the intricacies of a complicated business.

Ray Dalio started his career as a golf caddy in Long Island

When Dalio was 12 years old, he worked as a golf caddy at the Links Golf Club. That's where he heard about the stock market for the first time and decided to invest in Northeast Airlines—the only stock he knew that was selling for less than $5 a share. Dalio ended up tripling his profit and became fascinated with the stock market—ultimately laying the foundation for his legendary career as a hedge fund manager.

Warren Buffett's former professor Benjamin Graham is known as the 'father of value investing,' a strategy in which investors seek to buy stocks trading below their intrinsic worth.

Watch this video that uses Lego bricks to explain how venture capital works.

Up to a million Girl Scouts sell about 200 million cookie boxes every spring, generating $800 million, largely because refusing a child is frowned upon

Art theft is the third-largest source of criminal revenues worldwide, thanks in part to the subjective nature of valuing a work of art.

The US dollar is the most widely circulated currency in the world, and is involved in nearly 90% of global transactions

The Nasdaq's 'Magnificent 7' companies are responsible for roughly 40% of the Nasdaq 100 index's gains, while the remaining 93 companies account for the other 60%.

The idea for the Federal Reserve was conceived in secret in 1910—with bankers donning duck hunt gear for disguise while traveling to a remote country club on Georgia's Jekyll Island

The 1987 Nintendo video game 'Stadium Events' isn't known for being particularly fun, but its scarcity has made it a highly sought-after item that has sold for up to $35K at auction.

How Amazon operates a 'flywheel' business model, a self-reinforcing cycle that drives continuous growth

Massive 3D printers have been used to build homes by stacking layers of 'concrete toothpaste,' a fire-resistant material that effectively insulates against outside noise.

As of 2025, the most cited papers in science include a review of graphene, methods to improve image recognition, streamlining electron density calculations, and optimizing protein studies.

Use this tool to calculate the dollar value of your parental mental load, from meal planning to coordinating after-school care, then see resources that help generate solutions.

Coral polyps reproduce via broadcast spawning, where entire reefs simultaneously release reproductive cells for about one hour, once a year.

The most expensive ad of all time was for Chanel No. 5 perfume and cost roughly $33M to produce in 2004—about $57M in today's dollars.

The 2026 Ebola outbreak in the DRC is spurring new Ebola vaccine development for the Bundibugyo species.

Explore a list of the 100 best novels of all time, compiled by some of the world's best living writers, including Salman Rushdie, Stephen King, and Jennifer Egan.

The first steps to rebuilding your credit score include getting to know exactly what's on your credit report and figuring out how far you are from the '700 club,' or 'good score' range.

Gerrymandering works through two techniques: cracking opposing voters across districts to dilute their power, and packing them into a few to waste their votes in lopsided majorities.

Power lines are dotted with large, brightly colored balls to improve the visibility of these thin wires to helicopters and small planes and help prevent potential crashes.

Jimmy Carter signed a 1978 bill that legalized home brewing, a move credited with kick-starting the craft beer industry.

Doctors differentiate between a phobia and fear by asking patients whether their fear interferes with their day-to-day activities.

The first image of a black hole was captured by creating an Earth-sized virtual observatory from a network of eight radio telescopes.