Finding of ritter study of initial public offerings

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Reference no: EM131994785

1. Which one of these is a finding of Ritter's study of initial public offerings (IPOs)?

IPO firms tend to lose 10 percent or more of their market value in the 2 years following their IPO.

IPOs are generally incorrectly priced at issuance because over the next 5 years the IPO firm's abnormal returns exceeded 6 percent on average.

The annual returns for IPO firms during the 5-year period following an IPO are about 2 percent lower than their control group.

Firms with either IPOs or SEPs tend to outperform their control groups for the 5-year period following the issue of the new securities.

Comparable IPO and non-IPO firms had similar returns for the 5-year period following an IPO.

2. boren shaft Inc is a copper mining company with operations in INdonesia, Magnolia and Chile. Boren Shaft uses the residual dividend model to set its dividends. WHich of the following best describes the pattern of Boren's dividends over time?

Dividends fluctuate w/ copper prices over time

Dividends increase slowly and stably over time

Dividends fluctuate w/ copper prices and new discoveries of copper

Dividends are fixed so that no negative signal is sent

Reference no: EM131994785

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