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    Question

    In the context of Initial Public Offerings (IPOs), a

    Green Shoe option specifically refers to:
    A A mechanism allowing companies to withdraw an IPO Correct Answer Incorrect Answer
    B An option for investors to resell their shares immediately post-listing Correct Answer Incorrect Answer
    C An option that permits underwriters to issue additional shares beyond the planned issue size Correct Answer Incorrect Answer
    D An obligation of investors to hold IPO shares for at least one year Correct Answer Incorrect Answer
    E The right of retail investors to buy shares at a discounted price Correct Answer Incorrect Answer

    Solution

    The Green Shoe option allows underwriters to stabilize share prices post-listing by issuing up to 15% extra shares if demand exceeds supply.

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