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.

Question

Quizplus · Accepted Answer

Underpricing can occur in any of these situations. When additional shares are issued for companies with securities already publicly traded, the underpricing is usually done to avoid dilution of the value of existing shares. In the case of new securities being offered to the public, underpricing is often done to ensure a successful market reception and to attract investors. Large secondary offerings may also be underpriced to make them more attractive to the market.

Underpricing Occurs