Which of the Following Have Been Offered as Justification for IPO

question 16

Multiple Choice

Which of the following have been offered as justification for IPO underpricing?
I.Young firms tend to be very risky.
II.The best IPOs are oversubscribed.
III.Underwriters like to avoid lawsuits.
IV.It benefits the existing shareholders.

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

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Definitions:

Economic Efficiency

The optimal allocation of resources to maximize production and fulfill consumer needs in a way that minimizes waste and inefficiency.

Politician

An individual actively engaged in politics, often holding or seeking an elected position within government.

Contributors

Individuals or entities that provide resources, such as money, time, or expertise, to support a project, cause, or organization.

Bureaucrats

Officials within an administrative system, especially those perceived as being concerned with procedural correctness at the expense of people's needs.