Which of the Following Is True of Underpricing

question 7

Multiple Choice

Which of the following is true of underpricing?

• A)Underpricing occurs when the offer price is above the first closing price.
• B)Underpricing occurs when the average daily return of the IPO is lower than the market return.
• C)Underpricing is measured as the average initial returns measured over the first trading day.
• D)Underpricing is measured as the percentage increase from the intrinsic value to the first closing price.

---

Definitions:

International Politics

The study of interactions, conflicts, and cooperation among countries, including diplomacy, war, trade, and treaties.

Cultural Imperialism

The practice of promoting and imposing a culture, usually that of a more powerful nation, over a less dominant society; this can involve the spread of cultural practices, media, language, or products.

Neoliberal States

Neoliberal states refer to countries that prioritize market-oriented reforms, such as privatization, deregulation, and reductions in government spending, to foster economic growth.

Capital Accumulation

The process by which wealth is created and accumulated in a capitalist system, often through reinvestment of profits to generate more wealth.