question archive Which of the following statements is NOT CORRECT? a
Which of the following statements is NOT CORRECT? a
Subject:BusinessPrice:2.87 Bought7
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.
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Answer:
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 .
This statement is incorrect . because, Private market securities are more customised though less liquid than public securities. Also IPO's have low offering price.
But ,if there is a high demand of the stock , The stock price could rise on the first day of trading . This will fluctuate stock's intrinsic value . Thus , this statement is incorrect.
