Mobile Units recently offered 75,000 new shares of stock for sale. The underwriters sold a total of 78,500 shares to the public at a price of $16 a share. The additional 3,500 shares were purchased in accordance with which one of the following?

Question

Quizplus · Accepted Answer

The additional 3,500 shares were likely purchased through the green shoe provision, which allows the underwriters to sell more shares than originally offered by the issuer in order to meet demand from investors. This can help stabilize the stock price in the aftermarket by providing additional supply if the stock price rises above its IPO price.

Mobile Units Recently Offered 75,000 New Shares of Stock for Sale