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 because investor demand for new stock issues tends to be high during these periods, and underwriters want to take advantage of that demand to sell as many shares as possible. During a bear market or market crash, demand for new stock issues tends to be low, and underwriters may struggle to sell all the shares they are offering. During a stable period, demand for new stock issues may be moderate, but it is unlikely to be as high as during a bull market, so underwriters are less likely to oversell.

Underwriters Are More Likely to Oversell New Stock Issues During