Which of the Following Is NOT Generally Considered a Cost

question 4

Multiple Choice

Which of the following is NOT generally considered a cost of going public?

• A)Underpricing: IPOs appear to be substantially underpriced.
• B)Competition: Now that the firm is more visible, industry rivals will compete more intensively.
• C)Issuance Costs: The typical underwriter spread for an IPO is 7% of the offering proceeds.
• D)Management's time in preparing for the offering.
• E)Loss of Control: New equityholders may press the firm to change its investment, financing, or dividend policies, and may also attempt to replace the firm's original management team.

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Definitions:

Compounded Daily

A method where interest is calculated and added to the account balance every day, leading to higher yields over time.

Loan

Borrowed money that is typically repaid with interest.

Compounded Daily

The process of calculating interest where the accrued interest is added to the principal sum each day, resulting in interest earnings on interest.

Investment Account

An account held at a financial institution that is used by investors to hold and manage securities, such as stocks, bonds, and mutual funds, and other investments.