The Abnormal Returns for Initial Public Offerings Over Longer Time

question 56

Multiple Choice

The abnormal returns for initial public offerings over longer time periods seem to call market efficiency into question because:

• A) the average returns at announcement are large and positive while the long-term results are much lower than the returns for seasoned equity offerings.
• B) the average returns at announcement are small and negative while the long-term results are much lower than the returns for seasoned equity offerings.
• C) the average returns at announcement are zero while the long-term results are much higher than the returns for seasoned equity offerings.
• D) the average returns at announcement are large and positive while the long-term results are much higher than the returns for seasoned equity offerings.
• E) the average returns at announcement are insignificant while the long-term results are much lower than the returns for seasoned equity offerings.

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Definitions:

Mineralocorticoids

A type of steroid hormone that regulates salt and water balances in the body.

Electrolyte Balances

The levels of minerals in the body that have an electric charge, crucial for nerve and muscle function, hydration, blood pH, and other processes.

Sodium

A chemical element (symbol Na) that is highly reactive and essential for nerve and muscle function in the human body, commonly found in salt.

Kidney Tubules

The small tubes in the kidneys where reabsorption and secretion occur, playing a crucial role in the formation of urine.