Underpricing occurs
A) when additional shares are to be issued for companies with securities already publicly traded.
B) to aid in the market's reception of the securities.
C) in large secondary offerings.
D) all of these options are true.

Question

Quizplus · Accepted Answer

Underpricing can occur for any of these reasons. When additional shares are issued, underpricing can entice investors to purchase the new shares. Underpricing can also help increase demand and a positive market reception for the securities. Large secondary offerings can also lead to underpricing to balance supply and demand.

Underpricing Occurs