Which of the Following Statements Regarding Firm Commitment IPOs Is

question 27

Multiple Choice

Which of the following statements regarding firm commitment IPOs is FALSE?

• A) If the entire issue does not sell out, the remaining shares must be sold at a lower price and the underwriter must take the loss.
• B) The underwriter purchases the entire issue (at an offer price) and then resells it at a slightly higher price to interested investors.
• C) It is the most common underwriting arrangement.
• D) The underwriter guarantees that it will sell all of the stock at the offer price.

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