Which of the following statements regarding best efforts IPOs is FALSE?
A) For smaller IPOs, the underwriter commonly accepts the deal on this basis.
B) The underwriter does not guarantee that the stock will be sold, but instead tries to sell the stock for the best possible price.
C) Often these arrangements have an all-or-none clause: either all of the shares are sold in the IPO, or the deal is called off.
D) If the entire issue does not sell out, the underwriter is on the hook.
Answer: D
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A. active B. attentive C. interactive D. passive
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