Question : Assertion: An IPO provides an opportunity for the public to invest in a company.
Reason: IPOs are only available to existing shareholders of the company.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Assertion is false, but the reason is true.
Correct Answer: Assertion is true, but the reason is false.
Solution : The correct answer is (c) Assertion is true, but the reason is false.
The assertion is true. An IPO (Initial Public Offering) is the first time a company's shares become available to the general public for investment. It's an opportunity for the public to invest in the company for the first time.
The reason is false. IPOs are not limited to existing shareholders. In fact, the purpose of an IPO is to allow a company to raise capital by selling its shares to a broader public audience, including institutional and retail investors who were not previously shareholders of the company.
Question : Assertion: Initial Public Offering (IPO) is a method of raising short-term funds from the capital market.
Reason: IPO involves issuing new securities to the existing shareholders.
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile