Which of the Following Statements Is False

question 7

Multiple Choice

Which of the following statements is false?

• A) Once the issue price (or offer price) is set, underwriters may invoke another mechanism to protect themselves against a loss - the over-allotment allocation.
• B) Before the offer price is set, the underwriters work closely with the company to come up with a price range that they believe provides a reasonable valuation for the firm.
• C) Before an IPO, the company prepares the final registration statement and final prospectus containing all the details of the IPO, including the number of shares offered and the offer price.
• D) A "road trip" is where senior management and the lead underwriters travel around the country (and sometimes around the world) promoting the company and explaining their rationale for the offer price to the underwriters' largest customers - mainly institutional investors such as mutual funds and pension funds.

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Definitions:

Per-unit Tariff

A fixed fee imposed by a government on each unit of imported or exported goods.

Tariff Revenue

Income that a government receives from imposing duties on imported goods.

Foreign Producers

Companies or individuals that manufacture or provide services in one country for consumption in another country.

Domestic Producers

Local or national firms and individuals that produce goods and services within a country.