In a firm commitment underwriting with a 15% green shoe option, the underwriter overallots shares. If share price falls post-offering, how does the underwriter typically cover the short position?

1. AIt purchases shares in the open market to cover its short position, supporting the price.✓ Correct answer
2. BIt returns unsold shares to the issuer.
3. CIt cancels the green shoe option and absorbs the loss.
4. DIt issues new shares itself to cover the shortfall.

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