Which of the following statements regarding firm commitment IPOs is FALSE?
A) The underwriter guarantees that it will sell all of the issue at the offer price.
B) It is the most common underwriting arrangement.
C) The underwriter purchases the entire issue (at the offer price) and then resells it at a slightly higher price to interested investors.
D) If the entire issue does not sell out, the remaining shares must be sold at a lower price and the underwriter must take the loss.
Correct Answer:
Verified
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A)
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