INITIAL PUBLIC OFFERING (I.P.O.)

A company's first sale of stock to the public. Securities offered in an I.P.O. are often, but not always, those of young, small companies seeking outside equity capital and a public market for their stock. Investors purchasing stock in I.P.O.s generally must be prepared to accept very large risks for the possibility of large gains. I.P.O.'s by investment companies ( closed-end funds ) usually contain underwriting fees which represent a load to buyers.