Market stabilization
A) is the action by the managing investment banker to keep the price of newly issued securities from falling below the issue price to the public.
B) usually lasts 2 to 3 days, but can last up to 30 days if a security is difficult to distribute.
C) cannot always maintain high initial prices-a case in point being the Facebook issue, sold in May of 2012.
D) all of these options are true.

Question

Quizplus · Accepted Answer

All of the given options are true. Market stabilization is the action taken by the investment banker to keep the price of newly issued securities from falling below the issue price to the public. It usually lasts for a few days, but can last up to 30 days if the security is difficult to distribute. However, market stabilization cannot always maintain high initial prices, as seen in the case of Facebook issue, sold in May 2012.

Market Stabilization