Which of the Following Have Been Offered as Explanations of IPO

question 63

Multiple Choice

Which of the following have been offered as explanations of IPO underpricing? I.Underpricing helps offset the "winner's curse."
II) Underpricing helps ensure investors will be long-term holders of the IPO securities.
III) Underpricing helps ensure investment bank customers will earn a profit on average.
IV) Underpricing is needed to convince investors to accept the risks associated with IPOs.

• A)II only
• B)IV only
• C)II and III only
• D)I,III,and IV only
• E)I,II,III,and IV only

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Definitions:

Cumulative Quantity Discounts

Discounts the customer receives for buying a certain amount of a product over a stated period, such as one year.

Price Reductions

A strategy where the selling price of goods or services is lowered, often temporarily, to attract more customers or to clear inventory.

Channel Member

A participant in a distribution or supply chain who plays a role in moving products from producers to consumers.

Distribution Policies

Guidelines and strategies that determine how a product moves from production to the consumer.