Multiple choice

Book building is the process to assess demand for a particular public issue at various prices, based on which the issue price is determined and sold to the investors.

  1. True

  2. False

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A Correct answer
Explanation

Book building is indeed a price discovery mechanism used in IPOs where issuers gauge investor demand at different price ranges. The process helps underwriters determine the optimal issue price based on actual bids from institutional investors. This method replaced the fixed-price system in India to bring more market-driven pricing.