Which of the Following Statements Is FALSE

question 36

Multiple Choice

Which of the following statements is FALSE?

• A)Many IPOs, especially the larger offerings, are managed by a group of underwriters.
• B)After deciding to go public, managers of the company work with an underwriter, an investment banking firm that manages the offering and designs its structure.
• C)At an IPO, a firm offers a large block of shares for sale to the public for the first time.
• D)The shares that are sold in the IPO may either be new shares that raise new capital, known as a secondary offering, or existing shares that are sold by current shareholders (as part of their exit strategy), known as a primary offering.

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Definitions:

Forecasting Risk

The risk associated with making predictions about future events, which may not turn out as expected, potentially affecting financial projections and decisions.

Cash Flows

The movement of money into and out of a business or project, considered as a measure of its financial health.

Financial Break-even Point

The level of revenue necessary to cover all operating and financial costs, including interest and principal payments, yielding a net income of zero.

Discounted Payback Period

The amount of time it takes for an investment to generate enough cash flows to recover the initial outlay, with the cash flows discounted to account for the time value of money.