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wrightjb wrightjb
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4 years ago
Which of the following best describes a firm commitment IPO?

▸ The underwriter purchases the entire issue at a small discount and then resells it at the offer price.

▸ The underwriter sells new issues directly to the public in an online auction.

▸ The underwriter solicits bids from investors and chooses the highest price at which there is sufficient demand to sell the entire issue.

▸ The underwriter tries to sell the stock for the best possible price but does not guarantee that the stock will be sold.
Textbook 
Fundamentals of Corporate Finance

Fundamentals of Corporate Finance


Edition: 2nd
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#1
4 years ago
The underwriter purchases the entire issue at a small discount and then resells it at the offer price.
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