A syndicate exercises the green shoe option in an IPO, purchasing shares from the issuer at the offering price to cover overallotments. What is the primary purpose of this transaction?

1. ATo allow company insiders to sell more shares
2. BTo cover excess demand and stabilize the share price post-offering✓ Correct answer
3. CTo increase underwriter compensation by purchasing shares at a discount
4. DTo reduce the number of shares outstanding

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