Which of the Following Statements Is FALSE

question 99

Multiple Choice

Which of the following statements is FALSE?

• A)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.
• B)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.
• C)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.
• D)Once the issue price (or offer price)is set, underwriters may invoke another mechanism to protect themselves against a loss-the over-allotment allocation.

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Definitions:

Financing Activities

Activities that result in changes in the size and composition of the contributed equity and borrowings of the entity, as shown in its cash flow statement.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a predetermined call price.

Redeemed

Refers to the repayment or buyback of securities, such as bonds or preferred stocks, before their maturity.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy.