Question

Which of the following statements is false?

Options de la question 21 :

	Underwriters appear to use the information they acquire during the book-building stage to intentionally underprice the IPO, thereby reducing their exposure to losses.
	The green shoe option allows the firms to issue more stock, amounting to 15% of the original offer size, at the IPO offer price.
	The lead underwriter usually makes a market in the stock and assigns an analyst to cover it.
	In most cases, the pre-existing shareholders are subject to a 180-day lockup; they cannot sell their shares for 180 days after the IPO. Once the lockup period expires, they are free to sell their shares.
	None of the above.

Answer 1

Under the green shoe option, additional 15% shares can be issued of the original size

Lead underwriter makes the market and also assigns an analyst to cover it

Under the lock in period shares cannot be sold, however after the lock in period it can be freely sold

IPO price can be underpriced accidentally as he might underevaluate the demand for the shares. So infact he should have priced the IPO higher if there was high demand

Option a is false