The Abnormal Returns for Initial Public Offerings Over Longer Time

question 16

Multiple Choice

The abnormal returns for initial public offerings over longer time periods seem to call market efficiency into question because:

• A) the average returns at announcement are large and positive while the long-term results are much lower than the returns for seasoned equity offerings.
• B) the average returns at announcement are small and negative while the long-term results are much lower than the returns for seasoned equity offerings.
• C) the average returns at announcement are zero while the long-term results are much higher than the returns for seasoned equity offerings.
• D) the average returns at announcement are large and positive while the long-term results are much higher than the returns for seasoned equity offerings.
• E) the average returns at announcement are zero while the long-term results are much lower than the returns for seasoned equity offerings.

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Definitions:

Limited Value

Something that has restricted worth or importance, often due to specific conditions or contexts.

Insight Step

The process of gaining a deep understanding of a complex situation or problem, often the first phase in problem-solving or decision-making.

Creative Thinking

The ability to think in novel ways, generate new ideas, and devise unconventional solutions to problems.

Problem-Conquering

The process or approach taken to address, resolve, and overcome challenges or barriers effectively.