Which One of the Following Statements Is NOT True

question 22

Multiple Choice

Which one of the following statements is NOT true?

• A) In a best-efforts offering, the underwriters will suffer a financial loss if the offer price is set too high.
• B) In a best-efforts 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.

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Definitions:

Sale of Goods

A transaction between a buyer and a seller in which ownership of physical products is transferred in exchange for money.

Transaction

A swap or transaction involving goods, services, or money among two or more entities.

Risk of Loss

Refers to the legal and financial responsibility for damages or loss of goods while in transit or until the title has passed to the buyer.

Yard Sale

An informal sale typically held outdoors by private individuals to sell personal items, such as clothing, household goods, and toys, often at low prices.