Which of the Following Is a Reason Why an IPO

question 70

Multiple Choice

Which of the following is a reason why an IPO is attractive to the managers of a private company?

• A)It gives their private equity investors the opportunity to diversify.
• B)They will be able to reduce their financial disclosure costs.
• C)It reduces the complexity of requirements regulating the company's management.
• D)It limits the amount of capital that can be raised through the public markets in subsequent offerings.
• E)The managers benefit significantly from underpricing.

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Definitions:

Cohen

A surname often associated with statistical measures of effect size, such as Cohen's d for measuring the difference between two means.

Effect Size

A quantitative measure of the magnitude of the experimental effect, indicating the practical significance of the difference between groups.

Significance Level

A statistic representing the probability of committing a Type I error, typically denoted by alpha (α), indicating how likely it is to find a result as extreme as, or more so, if the null hypothesis is true.

P < .05

A statistical notation indicating that the probability of the observed results occurring by chance is less than 5%.