Which of the Following Statements Regarding Firm Commitment IPOs Is

question 89

Multiple Choice

Which of the following statements regarding firm commitment IPOs is most accurate?

• 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 does not guarantee that the stock will be sold,but instead tries to sell the stock for the best possible price.
• C)It is the least common underwriting arrangement.
• D)Rather than setting the offer price,the underwriter lets the market determine the price through bids from potential investors.
• E)Often these arrangements have an all-or-none clause: either all of the shares are sold in the IPO,or the deal is called off.

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