Series 79 practice questioneasyBook Building and Pricing
If an IPO order book is multiple times oversubscribed by high-quality long-only investors, what pricing implication is most likely?
- AThe SEC must suspend the offering
- BThe issuer may have leverage to price at or above the initial range✓ Correct answer
- CThe offering must convert to a rights issue
- DThe greenshoe becomes unavailable
Explanation
Why B — The issuer may have leverage to price at or above the initial range
The issuer may have leverage to price at or above the initial range Strong, high-quality demand can support a higher valuation or tighter pricing within the marketed range. Banks still balance price maximization against aftermarket performance and investor quality.
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