Which Statement Is True

question 46

Multiple Choice

Which statement is true?

• A)IPO underpricing primarily benefits a firm's pre-issue owners.
• B)IPO underpricing is a function of the underwriting spread.
• C)The more an issue is underpriced, the more it tends to be oversubscribed.
• D)Underpricing tends to discourage investors from participating in the IPO market.
• E)Undersubscribed shares generally tend to also be underpriced shares.

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Definitions:

Retained Earnings

Definition: The portion of a business's profits not distributed as dividends to shareholders but instead retained for reinvestment or to pay off debt.

Cash Dividend

A payment of earnings declared by a company's board of directors, distributed among shareholders in the form of cash.

Cash Dividends

Payments made to shareholders out of a corporation's earnings in the form of cash.

Date Of Record

The specified date on which a company determines its shareholders of record to receive dividends or the beneficiaries of stock splits.