Underpricing is a technique used by underwriters to enhance the success of an issue.

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Underpricing is a common technique used by underwriters to generate a higher demand for a new issue and increase the likelihood of its success. By setting the offer price below the expected market price, underwriters aim to attract a greater number of investors and create a positive impression of the company or securities being offered. While underpricing may result in lower proceeds for the issuer, it can boost market interest, stabilize or boost the stock price, and generate positive publicity.

Underpricing Is a Technique Used by Underwriters to Enhance the Success