Use the following statements to answer this question:
I.Risk of information asymmetry is high in an IPO because the company's public disclosure, as a public firm, is minimal.
II.An IPO prospectus eradicates the issue of information asymmetry completely.

Question

Quizplus · Accepted Answer

Statement I is correct as an IPO often involves a company going public for the first time, therefore, information available to the public is limited. Statement II is incorrect as an IPO prospectus provides extensive information that helps reduce but does not completely eradicate information asymmetry.

Use the Following Statements to Answer This Question