Which of the following is not true regarding overallotment options?
A) Overallotment options are rarely used in IPOs today.
B) An overallotment option allows the lead underwriter to allocate an additional 15 percent of the shares of a firm engaging in an IPO.
C) The option allows the lead underwriter to purchase additional shares at the offer price.
D) The lead underwriter may use the shares from an overallotment option to help stabilize the stock price in the days after the IPO.
Correct Answer:
Verified
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