All of the following are advantages of an IPO EXCEPT:
A) the market provides a market value for the firm's common stock.
B) the original owners can reallocate their personal wealth away from the firm into more diversified portfolios.
C) the market provides a transparent measure of firm performance which can attract more investors.
D) IPOs are traditionally priced at a premium to cover the costs of the underwriters.

Question

Quizplus · Accepted Answer

IPOs are typically priced to attract investors, not at a premium to cover underwriting costs. The pricing strategy aims to balance the company's need for capital and investor interest, rather than directly covering the costs associated with the IPO process.

All of the Following Are Advantages of an IPO EXCEPT