Question

Which new issue cost results from a stock initially being sold for less than its true value?

Multiple choice question.

The Green Shoe option


Hubris pricing


Underpricing


Inherent discounting

Answer 1

The correct answer is **Underpricing**. This term refers to a situation where a stock is sold at a price lower than its true value, often seen in initial public offerings (IPOs) where the initial offering price does not fully reflect the company's potential value.