Which of the Following Statements Is FALSE

question 25

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:

Illegality

The state of being not allowed by law or illegal actions within various contexts, such as contracts or behaviors.

Accord and Satisfaction

Accord and Satisfaction is a legal settlement where a debtor agrees to pay a lesser amount than originally owed, and the creditor agrees to accept this as full settlement of the debt.

Specific Performance

A legal remedy where the court orders a party to fulfill their obligations under a contract, as opposed to awarding damages.

Waiver

A waiver is the voluntary relinquishment or surrender of some known right or privilege.