When a New Issue Goes Wrong and the Stock Price

question 68

Multiple Choice

When a new issue goes wrong and the stock price crashes:

• A) investors can only blame their bad luck.
• B) investors should sell the shares as soon as possible.
• C) investors may sue the company executives for mismanagement.
• D) investors may sue the underwriters for overhyping the issue.

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Definitions:

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise made to another party if the latter has reasonably relied on that promise to their detriment.

Software Power

The capability and effectiveness of software in performing its intended functions and tasks efficiently.

Reduction in Force

A corporate strategy involving the reduction of a company's workforce to improve financial performance or adapt to changing market conditions.

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise that another party has reasonably and substantially relied on, even if no formal contract exists.