What can underwriters likely do for new IPO issues with uncertain market demand from investors?
A) Undertake the issue on a best efforts basis.
B) Reduce the spread.
C) Cut short the roadshows.
D) Apply a shelf prospectus for the issue.

Question

Quizplus · Accepted Answer

Undertaking the issue on a best efforts basis is the most appropriate option when the market demand from investors is uncertain. It means that the underwriter will only commit to sell as many shares as possible, without assuming any financial risk for unsold shares. This can protect the underwriter from the potential losses if the market demand is lower than expected. The other options, such as reducing the spread or cutting short the roadshows, may not necessarily address the uncertainty of market demand and may not be effective in generating investor interest. Applying a shelf prospectus for the issue is not applicable for new IPO issues, as shelf prospectus is usually filed for future offerings by the company.

What Can Underwriters Likely Do for New IPO Issues with Uncertain