Because There Is More Uncertainty Involved in the Initial Market

question 114

True/False

Because there is more uncertainty involved in the initial market reaction to common stock, a larger "underwriting spread" often exists for stocks, compared to other types of offerings.

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Definitions:

Shaping

A method in behavioral psychology used to gradually train a new behavior by reinforcing successive approximations to the desired behavior.

Premack Principle

A principle in psychology that states that more probable behaviors will reinforce less probable behaviors.

Negative Reinforcement

The removal of a stimulus to increase the probability that a behavior will be repeated.

Positive Punishment

The addition of a stimulus to decrease the probability that a behavior will recur.