Dusty Corporation Is Issuing an IPO with an Issue Price

question 7

Multiple Choice

Dusty Corporation is issuing an IPO with an issue price of $15 per share that is expected to raise about $100 million. Which of the following is likely to be true?

• A) The price of the stock will be less than $15 at the close of the first trading day.
• B) The cost of the IPO to Dusty will be about $7 million.
• C) The stock will perform very well in the three to five years after the issue.
• D) None of the above is likely to happen.

---

Definitions:

Formal Authority

The power granted to an individual or organization by virtue of position or status, enabling them to enforce rules and make decisions.

Prerogatives

Special rights or privileges exclusively reserved for a particular person, group, or class.

Rational Persuasion

A method of influencing others through logical arguments and factual evidence to change beliefs, attitudes, or behaviors.

Proposed Activity

An action or series of actions planned or suggested for implementation.