Question

Which of the following statements is NOT CORRECT? a. When a corporation's shares are owned by a few individuals, we say that the firm is "closely, or privately, held." b. Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares. c. The stock of publicly owned companies must generally be registered with and reported to a regulatory agency such as the SEC. d. When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public, or an IPO," and the market for such stock is called the new issue or IPO market. e. It is possible for a firm to go public and yet not raise any additional new capital for the firm itself.

Answer 1

Answer:

B

Explanation:

Even if a firm goes public, its stock might still be overvalued or undervalued - the firm's value might diverge from its intrinsic value. Intrinsic value is value based on a firm's fundamentals. Going public doesn't guarantee that the firms value would merge with its intrinsic value

A privately held firm is a firm whose shares are not publicly offered. It is not listed on the stock exchange. When a private firm decides to go public for the first time, the transaction is called an initial public offering