Which of the following statements is INCORRECT?
A) When a corporation's shares are owned by a few individuals who own most of the stock or are part of the firm's management, we say that the firm is "closely, or privately, held."
B) "Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares.
C) When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called the new issue market.
D) It is possible for a firm to go public and yet not raise any additional new capital.

Question

Quizplus · Accepted Answer

"Going public" does not necessarily establish a firm's true intrinsic value, as market forces and investor sentiment can still affect the stock's price. Additionally, while "going public" does create a liquid market for the firm's shares, it does not guarantee that the market will always exist. Market conditions and the firm's performance can affect the demand for the shares.

Which of the Following Statements Is INCORRECT