Which One of the Following Statements About IPOs Is Not

question 62

Multiple Choice

Which one of the following statements about IPOs is not true?

• A) IPOs generally have been poor long-term investments.
• B) IPOs often provide very good initial returns to investors.
• C) IPOs generally provide superior long-term performance as compared to other stocks.
• D) Shares in IPOs are often primarily allocated to institutional investors.

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Definitions:

Fair Value Adjustment

An accounting process of updating the reported value of an asset or liability to reflect its current market value.

Noncontrolling Interest

An ownership position in a corporation in which the shareholder does not have sufficient voting power to enact changes or control the company’s operations.

Strategic Reasons

The underlying motives or rationales that guide a company's decisions and actions to achieve long-term objectives and competitive advantage.

Speculative Reasons

Motivations for making investments based on the expectation of substantial returns in the future, despite the risk of significant losses.