Episode Summary When a hot new stock debuts on the exchange and the price immediately skyrockets, the media celebrates a "successful debut". In reality, a massive first-day price pop is a direct transfer of wealth from the issuing company to the initial buyers, meaning the company sold its shares far too cheaply and left millions of dollars of funding on the table. This episode opens up the mechanics of underwriting, compares the different risk structures—including Canada's unique "bought deal"—and exposes the structural conflicts of interest that dictate who actually gets the best price.

Key Concepts

• The Underwriting Spread: This is how underwriters are paid. It is the difference between the price the public pays and the lower price the underwriters pay  ...