Which of the following is true about the process of setting the offering price of a security issue?
A. The offering price of an initial public offering (IPO) of the stock of a privately held company is determined by a financial intermediary.
B. An investment banker has an easier job of selling the issue if it carries a relatively high price.
C. An investment bank finds it easier to set the offering price of an initial public offering as compared to that of a seasoned offering.
D. An investment bank finds it easier to set the offering price of a seasoned offering of a private company than a seasoned offering of a public company.
E. If the company is already publicly owned, the offering price will be based on the existing market price of the stock or the yield on the firm's existing bonds.
Answer: E
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