Which of the following statements is INCORRECT?
A) When a corporation's shares are owned by a few individuals and are not traded on public markets, we say that the firm is "closely, or privately, held."
B) "Going public" establishes a firm's true intrinsic value, and it also ensures that a highly 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) Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC.

Question

Quizplus · Accepted Answer

"Going public" does not necessarily establish a firm's true intrinsic value, as market fluctuations and investor sentiment can greatly affect share prices. Additionally, while going public does create a more liquid market for a firm's shares, it does not guarantee that this market will always exist.

Which of the Following Statements Is INCORRECT