Why Does Underpricing Always Occur for an IPO

question 57

Multiple Choice

Why does underpricing always occur for an IPO?

• A)to guarantee sales by underwriters
• B)to discourage oversubscription from investors
• C)to reward customers by issuers
• D)to protect investors from deceptive firms

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Definitions:

Internal Locus of Control

The belief that one controls their own fate and outcomes are primarily the result of their own efforts.

Own Effort

The use of personal skills and labor to achieve a task or goal without external help.

Events in Their Lives

Significant occurrences or milestones that have an impact on individuals' personal or professional growth.

Observing Landscape

The practice of examining and studying the visible features of an area of land to understand its formation and changes.