All of the following are advantages of an IPO except ________________.
A) The market provides a market value for the firm's common stock.
B) The original owners can reallocate their personal wealth away from the firm into more diversified portfolios.
C) The market provides a transparent measure of firm performance which can attract more investors.
D) IPOs are traditionally priced at a premium to cover the costs of the underwriters.

Question

Quizplus · Accepted Answer

The statement "IPOs are traditionally priced at a premium to cover the costs of the underwriters" is not an advantage for the firm going public; it is merely an explanation for why IPOs are typically priced higher than the actual value of the stock. A premium price can make the shares less attractive to potential investors.

All of the Following Are Advantages of an IPO Except