According to economists, this is the main reason for underpricing of new issues.
A)Lack of competition among existing investment banks.
B)Entry of banks into the investment banking sector.
C)Monopoly power of the existing investment banks.
D)Mismatch of demand and supply of securities.
E)Risk premium for information advantage possessed by issuers.

Question

Quizplus · Accepted Answer

Underpricing of new issues is often attributed to the risk premium for the information advantage possessed by issuers, as investors demand compensation for the uncertainty and potential risks associated with new securities.

According to Economists, This Is the Main Reason for Underpricing