Which of the Following Statements Is FALSE

question 12

Multiple Choice

Which of the following statements is FALSE?

• A) Underwriters appear to use the information they acquire during the book-building stage to intentionally underprice the IPO, thereby reducing their exposure to losses.
• B) The green shoe option restricts an underwriter to issue more stock at the IPO offer price.
• C) The lead underwriter usually makes a market in the stock by matching buyers and sellers and assigns an analyst to cover it.
• D) In most cases, the existing shareholders are subject to a 180-day lockup; they cannot sell their shares for 180 days after the IPO. Once the lockup period expires, they are free to sell their shares.

---

Definitions:

Investment Turnover

A ratio that measures the efficiency of a company in using its investments to generate sales revenue, reflecting how effectively assets are being utilized.

Operating Income

The amount of profit realized from a business's operations after deducting operating expenses like wages, depreciation, and cost of goods sold.

Invested Assets

Items acquired or bought with the intention of earning income or profit.

Profit Margin

A financial metric displaying the percentage of revenue that remains as profit after all expenses have been deducted.