Underpricing Occurs

question 94

Multiple Choice

Underpricing occurs

• A) when additional shares are to be issued for companies with securities already publicly traded.
• B) to aid in the market's reception of the securities.
• C) in large secondary offerings.
• D) all of the other answers are correct

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Definitions:

Share Issuance

The process by which a company issues new shares of stock to investors or shareholders, increasing the number of outstanding shares.

Share Buy-backs

The process by which a company purchases its own shares from the marketplace, reducing the amount of outstanding stock on its balance sheet.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, thus having an ownership interest in the company.

Regulations

Rules and guidelines issued by governmental agencies to control or direct the conduct of activities.