Ritter's Study of Initial Public Offerings (IPOs) Showed That the Post

question 33

Multiple Choice

Ritter's study of Initial Public Offerings (IPOs) showed that the post offering stock performance was:

• A) less than the control group by about 2% in the five years following the IPO.
• B) incorrectly priced at issuance because over the next five years the abnormal returns were greater than zero on average.
• C) immaterial to the pricing of the IPO because future market performance is unknown at issuance.
• D) equal across IPOs, irrespective of risk or which year they were issued.

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Definitions:

Swing Set

A playground equipment consisting of one or more seats hung from a structure, allowing users to swing back and forth.

Alternative Evaluation

The process consumers go through in assessing the merits of different products or services before making a purchasing decision.

Postpurchase Evaluation

Postpurchase evaluation refers to the process customers go through after buying a product or service, assessing their satisfaction and the overall value they received.

Information Search

The process consumers engage in by searching for information about products or services to make an informed purchasing decision.