The Purpose of a Lockup Provision Is to ​

question 69

Multiple Choice

The purpose of a lockup provision is to ​

• A)keep individual investors from buying and selling stock.
• B)prevent downward pressure on the stock's price.
• C)increase the number of outstanding shares.
• D)allocate a larger proportion of stock to institutional investors.

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Definitions:

Firm-Based Risk

Refers to the potential for financial loss arising from factors unique to a specific company, such as management decisions, product demand, or operational efficiency.

Market-Based Risk

The risk of losses stemming from factors that affect the overall market, including fluctuations in interest rates, stock prices, and currencies.

Investment Risk

The possibility of losing some or all of the original investment, often measured by the volatility of returns.

Overconfidence

A cognitive bias where an individual's subjective confidence in their judgments is greater than their objective accuracy, often leading to riskier financial decisions.