JUIN Can Tobe at Caure: 2105 Question 4 Which of the following statements is correct about raising capital methods? 1. Funding needs for very early stage start-up firms are usually high and as a result one of the most commonly used method to raise capital is through initial public offerings (IPO). II. IPO underpricing is the increase in stock value from the initial offering price to the first-day closing price. III. Stock prices on a firm's seasoned equity offering often drop because investors believe that the firm is undervalued. IV. Using the best efforts IPO method, the issuer (IPO firm) does not bear the risk of the issues not being sold because the investment banks commit to make their best efforts to sell the whole deal. A. I only B. ll only C. II and IV only 1, III and IV only E. None of the choice combinations given in A., B., C., and D. are correct. D