The advantage of the bookbuilding method is that it allows underwriters to give preference to those investors whose bids are most helpful in setting the issue price and to offer them a reward in the shape of underpricing.

Question

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This statement is true. The bookbuilding method allows underwriters to gather bids from potential investors and use that information to determine the optimal issue price. The underwriters can then prioritize those investors whose bids were most helpful in setting the price and offer them a discount, known as underpricing, as a reward for their participation.

The Advantage of the Bookbuilding Method Is That It Allows