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A)Underwriters Appear to Use the Information They Acquire During the Book-Building

question 6

Multiple Choice

A) Underwriters appear to use the information they acquire during the book-building stage to intentionally under price the IPO,thereby reducing their exposure to losses.
B) The blue tooth option allows the underwriter to issue more stock,amounting to 15% of the original offer size,at the IPO offer price.
C) The lead underwriter usually makes a market in the stock and assigns an analyst to cover it.
D) In most cases,the preexisting 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.
Answer: B
Explanation: B) The green shoe option allows the underwriter to issue more stock,amounting to 15% of the original offer size,at the IPO offer price.
Diff: 2
Section: 23.2 The Initial Public Offering
Skill: Conceptual
-Which of the following is NOT one of the four characteristics of IPOs that puzzle financial economists?

Definitions:

Low SES

Refers to individuals or families with low socioeconomic status, often associated with lower income, education, and occupational status.

Specific Risk Factors

Particular elements or conditions that increase the chance of developing a disease or injury.

Mental Health Problems

A broad range of emotional, psychological, and psychiatric conditions that affect an individual's well-being, relationships, and daily functioning.

Indicated Prevention

Interventions that target high-risk individuals who have minimal but detectable symptoms of a disorder, or who exhibit vulnerability markers that indicate a predisposition to a disorder but do not currently meet diagnostic levels for the disorder.