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If the profit is guaranteed (which it seems like, with the government restrictions), investment firms should be able to simply borrow the money to buy the newly
by huac 12y ago
If the profit is guaranteed (which it seems like, with the government restrictions), investment firms should be able to simply borrow the money to buy the newly issued shares.
- zhoutong 12y agoYes, and it's exactly what's happening. There's no market inefficiency here. During the few days when IPOs are available, the overnight interbank interest rates usually increase significantly compared to other days. On average you can expect to make about 10% p.a. almost-risk-free from IPOs, similar to gearing A-grade corporate bonds.