Which of the Following Statements Is FALSE

question 12

Multiple Choice

Which of the following statements is FALSE?

• A) Underwriters appear to use the information they acquire during the book-building stage to intentionally underprice the IPO, thereby reducing their exposure to losses.
• B) The green shoe option restricts an underwriter to issue more stock at the IPO offer price.
• C) The lead underwriter usually makes a market in the stock by matching buyers and sellers and assigns an analyst to cover it.
• D) In most cases, the existing shareholders are subject to a 180-day lockup; they cannot sell their shares for 180 days after the IPO. Once the lockup period expires, they are free to sell their shares.

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Definitions:

Negotiable Instruments

Financial documents that guarantee the payment of a specified amount of money, either on demand or at a set time, with the payer named on the document.

Japanese Commercial Code

is a collection of laws that governs commercial transactions in Japan, including company law, commercial paper, and bankruptcy proceedings.

Holder

An individual or entity that possesses a negotiable instrument, such as a check or promissory note, and has the right to enforce it.

Bearer

Pertaining to negotiable instruments, it refers to the individual possessing the document entitled to the rights therein.