Final answer:
A broker-dealer promising to repurchase shares at a higher price than POP is not typical practice in public offerings, where companies provide no guarantee of rate of return, garnering returns through dividends and capital gains instead.
Step-by-step explanation:
When a broker-dealer acts as a distribution participant in a public offering of stock, making a pledge to repurchase shares from its customers at a price higher than the original public offering price (POP), this practice is not typical or recommended. Companies making a public offering do not typically promise a specific rate of return when they sell stock. Return on stock investments generally comes in two forms: dividends and capital gains.
The company benefits from an initial public offering (IPO) as it provides necessary funds to repay early-stage investors and capital for expansion. Decisions in a company owned by a large number of shareholders are typically made by elected board members or executives, not by the shareholders directly, though shareholders may have voting rights based on their shares.