A) Underwriters Appear to Use the Information They Acquire During

A) Underwriters appear to use the information they acquire during the book-building stage to intentionally underprice the IPO, thereby reducing their exposure to losses.
B) The blue tooth option allows the underwriter to issue more stock, amounting to 15% of the original offer size, at the IPO offer price.
C) The lead underwriter usually makes a market in the stock and assigns an analyst to cover it.
D) In most cases, the preexisting shareholders are subject to a 180-day lockup; they cannot sell their shares for 180 days after the IPO. Once the lockup period expires, they are free to sell their shares.
Answer: B
Explanation: B) The green shoe option allows the underwriter to issue more stock, amounting to 15% of the original offer size, at the IPO offer price.
Diff: 3 Type: MC
Topic: 23.2 The Initial Public Offering
-Which of the following statements regarding exit strategies is false?

A) An alternative way to provide liquidity to its investors is for the company to become a publicly traded company.
B) An important consideration for investors in private companies is their exit strategy, or how they will eventually realize the return from their investment
C) Often large corporations purchase successful start-up companies. In such a case, the acquiring company purchases the outstanding stock of the private company, allowing all investors to cash out.
D) Roughly 20% of venture capital exits from 2003-2012 occurred through mergers or acquisitions.