Which of the Following Statements Regarding Best Efforts IPOs Is

question 27

Multiple Choice

Which of the following statements regarding best efforts IPOs is FALSE?

• A)For smaller IPOs,the underwriter commonly accepts the deal on this basis.
• B)The underwriter does not guarantee that the stock will be sold,but instead tries to sell the stock for the best possible price.
• C)Often these arrangements have an all-or-none clause: either all of the shares are sold in the IPO,or the deal is called off.
• D)If the entire issue does not sell out,the underwriter is on the hook.

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Definitions:

Terms of Payment

The conditions under which a seller will complete a sale, typically specifying the period allowed to a buyer to pay for the goods or services received.

Equal Credit Opportunity Act

A United States federal law ensuring all consumers are given an equal chance to obtain credit, regardless of race, religion, national origin, sex, or marital status.

Discriminating

The act of making distinctions or differentiating between objects, subjects, or concepts.

Creditors

Individuals or institutions to whom money is owed by a debtor for provided goods or services, or as a result of a loan agreement.