Which One of the Following Statements Concerning IPOs and Underpricing

Multiple Choice

Which one of the following statements concerning IPOs and underpricing is correct?

A) IPO underpricing primarily benefits a firm's pre-issue owners.
B) IPO underpricing is a function of the underwriting spread.
C) The more an issue is underpriced, the more it tends to be oversubscribed.
D) Underpricing tends to discourage investors from participating in the IPO market.
E) Undersubscribed shares generally tend to also be underpriced shares.