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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