Which of the following statements is NOT CORRECT?
A) When a corporation's shares are owned by a few individuals and are not traded on public markets, we say that the firm is "closely, or privately, held."
B) "Going public" establishes a firm's true intrinsic value, and it also insures that a highly liquid market will always exist for the firm's shares.
C) When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called the new issue market.
D) Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC.
E) It is possible for a firm to go public and yet not raise any additional new capital at the time.

Question

​ Which of the following statements is NOT CORRECT?
A) ​When a corporation's shares are owned by a few individuals and are not traded on public markets, we say that the firm is "closely, or privately, held."
B) ​"Going public" establishes a firm's true intrinsic value, and it also insures that a highly liquid market will always exist for the firm's shares.
C) ​When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called the new issue market.
D) ​Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC.
E) ​It is possible for a firm to go public and yet not raise any additional new capital at the time.

Quizplus · Accepted Answer

Going public does not necessarily establish a firm's true intrinsic value, as the market may not accurately reflect the firm's true value. Additionally, while going public provides liquidity for the firm's shares, it does not insure that a highly liquid market will always exist for the firm's shares. Market conditions and other factors can impact the liquidity of a stock.

​ Which of the Following Statements Is NOT CORRECT

Which of the Following Statements Is NOT CORRECT