Which of the Following Is Correct If an Underwriter Is

question 69

Multiple Choice

Which of the following is correct if an underwriter is selling stock to the public at $40 per share,the underwriter receives a $3 per share spread,2 million shares are sold,and the issuing firm receives $111 million from the underwriter?

• A) The underwriter's spread was greater than $3.
• B) The issue appreciated in price immediately.
• C) The issue included 3 million shares.
• D) The stock was issued on a best efforts basis.

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Definitions:

Book-To-Market Effect

The tendency for securities with high book-to-market ratios to outperform those with low ratios.

Semistrong Form

A theory in the Efficient Market Hypothesis that postulates all publicly available information is already reflected in stock prices, including historical data and new public information.

Efficient Markets Hypothesis

A theory suggesting that financial markets fully reflect all available information, making it impossible to consistently achieve higher returns than the market average.

Publicly Available

Information or data that is not restricted and can be accessed or utilized by the general public.