Question: Which statement is true? If an IPO security is priced too high, the lower the likely demand from subscribers and the higher need for stabilization.

Which statement is true?

If an IPO security is priced too high, the lower the likely demand from subscribers and the higher need for stabilization.

Undersubscribed shares generally tend to also be underpriced shares.

IPO underpricing is a function of the underwriting spread.

Underpricing tends to discourage investors from participating in the IPO market.

IPO underpricing primarily benefits a firm's pre-issue owners.

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