Which of the Following Is NOT an Explanation Advanced for the Phenomenon

question 42

Multiple Choice

Which of the following is NOT an explanation advanced for the phenomenon of underpricing of an IPO?

• A)Providing the initial buyers with a capital gain in an effort to create goodwill.
• B)The desire of the seller in the primary market to achieve a successful float.
• C)The wish to raise smaller amounts of capital.
• D)Compensation for the risk accepted by buyers in IPOs, given that underpricing is not guaranteed.
• E)The superior negotiating power of the investment bank over the seller.

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Definitions:

Belongingness Needs

The innate human need to feel connected and accepted by others, often considered a fundamental human motivation.

Alderfer's Existence Needs

A component of Clayton Alderfer's ERG theory, focusing on the basic physical and material well-being requirements akin to Maslow's physiological and safety needs.

Maslow's

Relating to the hierarchy of needs theory developed by Abraham Maslow, which posits that human motivations are influenced by a progression of needs, starting from basic survival needs up to self-actualization.

Physiological Needs

Basic physical requirements for human survival, such as food, water, shelter, and clothing, that are essential to maintaining life.