Which of the Following Statements Regarding Best Efforts IPOs Is

question 22

Multiple Choice

Which of the following statements regarding best efforts IPOs is FALSE?

• A) Often these arrangements have an all-or-none clause: either all of the shares are sold in the IPO, or the deal is called off.
• B) If the entire issue does not sell out, the underwriter is on the hook.
• C) For smaller IPOs, the underwriter commonly accepts the deal on this basis.
• D) The underwriter does not guarantee that the issue will be sold, but instead tries to sell the issue for the best possible price.