Part of the Negotiation with the Investment Banker During the Selection

question 99

Multiple Choice

Part of the negotiation with the investment banker during the selection process has to do with how the investment banker will be compensated for taking the company public.One of these two standard compensation packages involves ________.

• A)a firm-commitment approach,in which the investment banker essentially buys the entire stock issue from the company at several prices
• B)a best efforts approach,in which the investment banker pledges to do his or her best to sell the shares and will take a small percentage of the sale of each stock
• C)a best efforts approach,in which the investment banker essentially buys the entire stock issue from the company at one price and then sells the issue at the auction for a higher price
• D)a firm-commitment approach,in which the investment banker pledges to do his or her best to sell the shares and will take a small percentage of the sale of each stock

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Definitions:

Sensory Overload

A condition where one or more of the body's senses experiences overstimulation from the environment.

Yielding

The act of giving in or surrendering to a force, argument, or influence.

Inoculation

A psychological technique used to make individuals resistant to attempts to change their attitudes or beliefs by exposing them to small doses of arguments against their position.

Psychological Reactance

The emotional response in opposition to a restriction on personal freedoms or choices, leading to an urge to regain them.