The Costs of Underpricing an Equity Issue Are Borne Mostly

question 9

True/False

The costs of underpricing an equity issue are borne mostly by the underwriter.

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Definitions:

Organization Cost

An intangible asset that records the initial cost of forming the corporation, such as legal and incorporating fees. Today, it is being expensed.

Intangible Asset

An asset that lacks physical substance, such as intellectual property, brand recognition, or goodwill.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.

Common Stock

A type of security that represents ownership in a corporation and entails voting rights and a share in profits through dividends.