The Abnormal Returns for Initial Public Offerings Over Longer Time

question 16

Multiple Choice

The abnormal returns for initial public offerings over longer time periods seem to call market efficiency into question because:

• A) the average returns at announcement are large and positive while the long-term results are much lower than the returns for seasoned equity offerings.
• B) the average returns at announcement are small and negative while the long-term results are much lower than the returns for seasoned equity offerings.
• C) the average returns at announcement are zero while the long-term results are much higher than the returns for seasoned equity offerings.
• D) the average returns at announcement are large and positive while the long-term results are much higher than the returns for seasoned equity offerings.
• E) the average returns at announcement are zero while the long-term results are much lower than the returns for seasoned equity offerings.

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Definitions:

Socialism

An economic and political system where the means of production, distribution, and exchange are owned or regulated by the community as a whole.

Negative Income Tax

A proposed form of welfare where individuals earning below a certain threshold receive supplemental pay from the government instead of paying taxes.

Top 20%

Refers to the highest earning or most successful 20% of a population or group in a specific context.

Negative Income Tax

A fiscal mechanism where individuals earning below a certain threshold receive supplemental pay from the government instead of paying taxes.