This workout asks us to identify whether the following statements regarding initial public offerings or IPOs are true or false. The first statement says that the issuing company may not raise money through an IPO. This is true. The IPO could be an entirely secondary offering, selling the shares of the existing stockholders. There will be no problem with that at all, so a true statement. The second statement says that the IPO price is set by the existing stockholders, which is a false statement since the IPO price is set in conjunction between the bank involved in the process, the company's directors, and potentially involving their stockholders as well. The next statement says, the IPO price is known to investors prior to the IPO date. This is a false statement. The IPO price is only set on the IPO date itself. However, an indicative range for the price will be given to investors prior to the IPO date.

The next statement states bookbuilding involves identifying interest from potential investors, which is a true statement. And then finally, existing stockholders are forced to sell their shares through an IPO. This is a false statement. Whilst existing stock holders may wish to sell their shares through an IPO, and can do, there is no requirement for them to do that at all. The existing stockholders that were in place when the company was private, can remain stockholders of the company once it has gone through the IPO process.