Question: Which of the following statement does not explain why many IPOs are underpriced? A. Underpricing is a form of compensation for investment institutions that honestly

Which of the following statement does not explain why many IPOs are underpriced?

A. Underpricing is a form of compensation for investment institutions that honestly reveal the worth of the securities when surveyed by the syndicate prior to their issues.

B. Underpricing parallels the efficient market hypothesis.

C. Underpricing insures the investment dealers against future lawsuits by customers claiming that they have bought overpriced securities.

D. Underpricing is used to counteract the "winner's curse" and encourage the average investors to purchase the new issue.

E. Underpricing is used to counteract the uncertainty effects of smaller, riskier firms.

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