📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    âš¡ Month End Offer - Flat 52% Off On All Courses! Enroll Now âš¡
    00:00:00 AM Left

    Question

    What does the greenshoe option refer to in an IPO

    underwriting agreement?
    A The right of the issuer to buy back shares from investors Correct Answer Incorrect Answer
    B The option for investors to purchase additional shares at a discounted price Correct Answer Incorrect Answer
    C The underwriter's right to sell more shares than initially planned in case of high demand Correct Answer Incorrect Answer
    D The option for the underwriter to delay the IPO Correct Answer Incorrect Answer
    E The right of existing shareholders to participate in the IPO at a premium price Correct Answer Incorrect Answer

    Solution

    The greenshoe option refers to a clause used in an underwriting agreement during an IPO wherein this provision provides a right to the underwriter to sell more shares to the investors than an issuer planned if demand is higher than expected for the security issued.

    Practice Next
    More Beepedia Questions
    ask-question