Which of the Following Is True of the Underwriting of IPOs

question 170

Multiple Choice

Which of the following is true of the underwriting of IPOs performed by investment banks?

• A)The investment bank is prohibited from profiting from the underwriting.
• B)The investment bank is not responsible for reselling the purchased shares in the market.
• C)The investment bank commits to buy stock from the issuing company at a fixed price.
• D)The investment bank resells the underwritten stock in the market at a discounted price.

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Definitions:

Activity-Based Costing

A method in accounting that assigns costs to products and services based on the resources they consume.

Direct Materials Cost

The expense incurred for materials that are an integral part of a finished product, which can be directly attributed to the product itself.

Activity-Based Costing

A costing methodology that assigns costs to products or services based on the resources they consume, aiming to provide more accurate cost information.

Overhead Cost

Expenses related to the operation of a business that are not directly tied to a specific product or service, such as rent and utilities.