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Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Question
Chapter 20, Problem 4CQ
Summary Introduction
To explain: The reason for underpricing being not a great concern with the offering of bonds.
Bond:
Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.
Underpricing:
The term underpricing refers to the offering of the stocks or the bond at a low price than before. The stocks or the debt are said to be underpriced when they are traded at a lower price than on which it was issued first for trade.
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Corporate Finance
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