What is an Initial Public Offering (IPO)?

An Initial Public Offering (IPO) refers to the first time a private company offers its shares to the public for purchase. This process allows a company to raise capital by selling a portion of its ownership in the form of stock, giving investors the opportunity to buy into the company. An IPO typically involves issuing new shares and may also allow existing shareholders, such as company executives or early investors, to sell some of their shares to the public.

By choosing to go public, a company can significantly increase its visibility, enhance its credibility, and gain access to the capital markets for future financing needs. Moving from a private to a public entity can also lead to an increased valuation of the company and provide liquidity options for existing shareholders.

The other options do not accurately describe an IPO. The selling of bonds pertains to debt instruments rather than stock, a company's announcement of financial results is related to reporting rather than raising capital, and the sale of existing shares does not encompass the initial public offering context where private ownership is being transitioned to public ownership for the first time.