Underwriters are more likely to oversell new stock issues during:

Question

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Underwriters are more likely to oversell new stock issues during a bull market or market boom, when investor demand for new stocks is high and there is an expectation of high returns on investment. This can lead to oversubscription and an increase in the price of the new stock, benefiting both the underwriters and the issuing company. During a bear market or market crash, investor demand for new stocks decreases, and underwriters may struggle to sell their allotted shares, resulting in lower prices and potential losses. In a stable market period or an extremely volatile market period, the behavior of underwriters may vary depending on various factors. However, the most likely scenario for overselling new stock issues by underwriters occurs during a bull market or market boom.

Underwriters Are More Likely to Oversell New Stock Issues During