What Is the Major Reason That Underwriters Tend to Offer

question 23

Multiple Choice

What is the major reason that underwriters tend to offer stocks in an IPO at a price that is below that which the market will pay?

• A) to gain from the rise in value of any stocks they hold after the IPO
• B) to reduce their exposure to losses from unsold stock
• C) to benefit from greenshoe provisions
• D) to increase their spread

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Definitions:

Narcissistic Personality Disorder

A mental condition characterized by a long-term pattern of exaggerated self-importance, the need for excessive attention and admiration, and a lack of empathy for others.

Self-Importance

An exaggerated estimation of one's own significance or value, often without regard to the reality of one's abilities or status.

Avoidant Personality Disorder

A mental health disorder characterized by persistent feelings of inadequacy, extreme sensitivity to what others think about them, and avoidance of social interaction despite a desire for closeness.

Dissociative Identity Disorder

A psychiatric diagnosis that describes a condition involving the presence of two or more distinct personality states or identities in a single individual, often a result of severe trauma.