Would you expect initial return to have been higher-lower

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Reference no: EM131835043

Context: NTG went public by issuing 15 million shares at an offer price of $20 per share. Current owners of the company have agreed to a long lock-up period – prohibiting them to sell their own shares within one year of the offering date. On the first day of trading NTG opened with a stock price of $24.

Question: Suppose the lock-up period was chosen to be as short as 90 days. All else equal, would you expect the initial return to have been higher or lower? Explain why.

Reference no: EM131835043

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