Which of the Following Statements Is NOT True

question 22

Multiple Choice

Which of the following statements is NOT true?

• A) In a best-effort offering, the underwriters will suffer a financial loss if the offer price is set too high.
• B) In a best-effort agreement, the issuing firm will lose if the offer price is set too high.
• C) If the underpricing is significant, the investment banking firm will suffer a loss of reputation for failing to price the new issue correctly and raising less money for its client than it could have.
• D) Underpricing is defined as offering new securities for sale at a price below their true value.