Dominic Pizetta Works for an Investment Bank That Helps Young

Multiple Choice

Dominic Pizetta works for an investment bank that helps young firms go public. The client firm he is currently helping shows great promise due to the fact that it owns several patents on marketable innovations. Dominic's investment bank has agreed to underwrite the stock issue. What does this mean that it will do?

A) It will arrange for a single major venture capital firm to buy all of the stock at an agreed-upon price.
B) It will set the stock price relatively high at the beginning of the IPO and gradually lower it until all shares are sold.
C) It will purchase all the shares of stock itself at an agreed-upon price, so that the client will receive a known amount of funds.
D) It will guarantee the sale of all shares to investors in a stated time period (usually 72 hours) , but in order to do so, will set the price relatively low at the beginning of the IPO.