Which One of These Is a Finding of Ritter's Study

question 29

Multiple Choice

Which one of these is a finding of Ritter's study of initial public offerings (IPOs) ?

• A)Firms with either IPOs or SEPs tend to outperform their control groups for the 5-year period following the issue of the new securities.
• B)IPOs are generally incorrectly priced at issuance because over the next five years the IPO firm's abnormal returns exceeded 6 percent on average.
• C)The annual returns for IPO firms during the 5-year period following an IPO are about two percent lower than their control group.
• D)Comparable IPO and non-IPO firms had similar returns for the 5-year period following an IPO.
• E)IPO firms tend to lose 10 percent or more of their market value in the two years following their IPO.

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Definitions:

Time Sampling Error

An error that occurs in statistical analysis when the data collected or observed are not representative of the time period intended.

Practice Effect

A situation in which individuals improve their scores across test administrations as a result of increased familiarity and comfort with a test and the content that is being assessed.

Fatigue

A situation where clients tire from multiple administrations of a test and their performance decreases as they grow weary of the testing process.

Measurement Error

The difference between the actual value and the measured value due to limitations or inaccuracies in measurement tools or processes.