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What is a green shoe option in an IPO?

  1. A An over-allotment option allowing additional shares to be issued to stabilise the price
  2. B A discount for retail investors
  3. C An environmental compliance requirement
  4. D A lock-in provision
Answer

An over-allotment option allowing additional shares to be issued to stabilise the price

It lets the stabilising agent support the price in early trading by buying back shares if the price falls below the issue price.

All Investment Banking MCQs

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