1. Underwriting:
   1. Is a right issue more likely to be used for an initial public offering or for a subsequent issue of stocks?
   2. Is a private placement more likely to be used for issues of seasoned stock or seasoned bonds by an industrial company?
   3. Is the prompt offering prospectus (POP) system more likely to be used for issues of unseasoned stocks or bonds by a large industrial company?
2. Each of the following terms is associated with one of the events beneath. Can you match them up?
   1. Red Herring
   2. Firm Commitment
   3. Right Issue
3. Having heard about IPO Under pricing, I put in an order to my broker for 1,000 shares of every IPO he can get for me. After three months, my investment record is a follows:

IPO	Shares Allocated to me	Price Per share	Initial Return
A	500	$10	7%
B	200	$20	12%
C	1,000	$8	-2%
D	0	$12	23%

1. What is the average underpricing of this sample of IPO?
2. What is the average initial return on my "portfolio" of shares purchased from the 4 IPOs I bid on? Calculate the average initial return, weighting by the amount of money invested in each issue.
3. Why have I performed so poorly relative to the average initial return on the full sample of IPOs? What lessons do you draw from my experience?

1. Why are the issues costs for debt issues generally less than those for equity issues?