Professor Clifford W

question 32

Multiple Choice

Professor Clifford W.Smith, in evaluating issuance costs from underwritten issues, rights issues with standby underwriting and a pure rights issues found that 90% of the issues are underwritten which
Was the most expensive method.This is done because:

• A)investment bankers know more than CFOs and they may buy the issue at an agreed price
• And disburse the funds sooner.
• B)investment bankers can increase the price received by increasing confidence in the issue,
• They will buy the issue at an agreed upon price and disburse the cash sooner.
• C)investment bankers provide other services including price counsel, increase public
• Confidence and provide funds to the issuer sooner.
• D)investment bankers know how to price the issue, would not need to set as low as a price
• As the subscription price and provide price counsel.
• E)None of the above.

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Definitions:

Logic

The study of reasoning and argumentation, focused on understanding the principles and criteria of valid inference and demonstration.

Premises

Statements or propositions that are assumed to be true and from which a conclusion is drawn in an argument.

Conclusion

The end result or outcome of an argument or a process.

Explanation

A statement or account that makes something clear by describing the causes, context, or details behind a situation or phenomenon.