Utility companies are said to have a low beta because there is generally a constant demand for their products. The IPO price is set by the underwriter, the firm that is bringing the stock to the market. Basically, we don't. The market decides the price of the stock. A. Simple interest is like a simple math problem.
Compound interest means that interest is charged on the previous interest as well as on the balance.
How can we know that the market stock price is not overprice or underprice. A. One common method is the Capital Asset Pricing Model. A. Selling stock is a way for companies to raise capital.