Which of the Following Statements Is FALSE

question 62

Multiple Choice

Which of the following statements is FALSE?

• A)In most cases, the pre-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.
• B)Underwriters appear to use the information they acquire during the book-building stage to intentionally underprice the IPO, thereby reducing their exposure to losses.
• C)The lead underwriter usually makes a market in the shares and assigns an analyst to cover it.
• D)The bluetooth option allows the underwriter to issue more shares, amounting to 15% of the original offer size, at the IPO offer price.

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Definitions:

Marginal Product

The additional output a firm gains from employing one more unit of input, holding the levels of all other inputs constant.

Marginal Product

The increase in output that arises from an additional unit of input, holding all other inputs constant.

Factors of Production

Resources used in the production of goods and services, including labor, capital, entrepreneurship, and land.

Total Income

The aggregate amount of money earned by an individual or organization from all sources before taxes or deductions.