Which of the Following Is a Reason for a Firm

Multiple Choice

Which of the following is a reason for a firm to underprice new issues?

A) When the market is in equilibrium, additional demand for shares can be achieved only at a higher price.
B) When additional shares are issued, each share's percent of ownership in a firm is diluted, thereby justifying a higher share value.
C) When additional shares are issued, each share's percent of ownership in a firm is concentrated, thereby justifying a lower share value.
D) When the market is in equilibrium, additional demand for shares can be achieved only at a lower price.