Which of the Following Is Not One of the Four

question 31

Multiple Choice

Which of the following is not one of the four characteristics of IPOs that puzzle financial economists?

• A) On average, IPOs appear to be underpriced.
• B) The long-run performance of a newly public company (three to five years from the date of issue) is superior to the overall market return.
• C) The number of issues is highly cyclical.
• D) The costs of the IPO are very high, and it is unclear why firms willingly incur such high costs.

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Definitions:

UCC

A thorough set of legal guidelines for the governance of commercial transactions in the United States is provided by the Uniform Commercial Code.

Clearinghouse Procedure

A process handled by a clearinghouse, which acts as an intermediary between buyers and sellers in financial markets, ensuring the smooth execution of transactions.

Drawer Liability

Drawer liability pertains to the legal responsibility of the person who writes or signs a check or draft to ensure the availability of sufficient funds in the account for the amount specified for payment.

Wrongfully Dishonored

Refers to a situation where a financial institution unjustifiably refuses to pay or accept a negotiable instrument when properly presented.