easy · Investment Banking rx-dcm-ecm
In the context of an IPO, what is a 'Greenshoe' or Overallotment Option?
- An option for underwriters to sell up to 15% more shares than originally planned to stabilize the stock price.
- A special tax break the IRS grants to companies that choose to list their shares on the Nasdaq instead of the NYSE.
- A requirement forcing the newly public company to pay out a large special dividend immediately right after going public.
- An option letting the CEO personally buy back all outstanding shares if the price drops by half.
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