A Green Shoe provision can be defined as a(n):

Question

Quizplus · Accepted Answer

A Green Shoe provision is an overallotment option that allows underwriters to sell additional shares beyond the initial offering to meet demand. This option can be exercised for up to 15% of the original share offering, and can help stabilize the market price of the shares by providing additional supply if demand exceeds expectations. Therefore, choice C is the correct answer as it accurately describes a Green Shoe provision. A is incorrect, as a privileged subscription refers to a company offering new shares to existing shareholders before they are available to the public. B is incorrect, as there is no guarantee of sale for all shares offered. D and E are also incorrect as they refer to pricing methods, not provisions for additional share sales.

A Green Shoe Provision Can Be Defined as A(n)