Which of the Following Is True of the Underwriting of IPOs

question 170

Multiple Choice

Which of the following is true of the underwriting of IPOs performed by investment banks?

• A)The investment bank is prohibited from profiting from the underwriting.
• B)The investment bank is not responsible for reselling the purchased shares in the market.
• C)The investment bank commits to buy stock from the issuing company at a fixed price.
• D)The investment bank resells the underwritten stock in the market at a discounted price.

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Definitions:

Content Validity

The extent to which a test or measure represents all facets of a given construct or domain.

Given Construct

A given construct refers to a specific concept or theoretical idea that is established and used as a basis for research or analysis.

Content Validity Ratio

A ratio of the number of raters who evaluate an item and the number of raters who deem an item to be an essential component of the construct being measured.

Panel of Experts

is a group of individuals with specialized knowledge or expertise convened to provide advice, insights, or recommendations on a specific subject.