Just call us Bond. Amortized bond.
Over 700 finance terms, Shmooped to perfection.
When an underwriter buys shares directly from the issuer first and then files the prospectus and the IPO. These are usually big deals, so the company ends up selling all of their shares. The underwriter, since they are buying up all the shares, can usually negotiate a sweet deal. Because of that, they can turn around and sell them at a good price (attracting more investors) while still making a profit.