7. Which of the following statements is correct in relation to the possible reason(s) for IPO underpricing?

Group of answer choices

More than one of the other statements accurately describes the reason(s) for IPO underpricing.

IPO underpricing can occur because informed investors are able to judge whether the IPO is overpriced, whereas uninformed investors are not able to judge whether the IPO is overpriced.

IPO underpricing can occur to make it harder for the firm to go back to the market to raise capital.

IPO underpricing can occur in order to hide information about the firm from institutional investors.

None of the other statements accurately describes the reason(s) for IPO underpricing.

Question 8

Pinder Ltd has 12 million shares outstanding, with a current share price of $15.57 each. Pinder Ltd then raises additional funds by placing 0.9 million shares at $8.5 each to Sean Inc, an institutional investor. Which of the following statement is correct in relation to the placement?

Group of answer choices

None of the other statements is correct.

The ownership of non-participating shareholders is diluted after the placement

Pinder Ltd share price is closest to $16.21 after the placement.

More than one of the other statements is correct.

There is a transfer of wealth from non-participating shareholders to Sean Inc by $7.65 million.