Series 79 practice questioneasyStabilization and Aftermarket
Under Regulation M, what is a stabilizing bid?
- AA permissible bid entered to support the market price of a distribution security, subject to strict conditions✓ Correct answer
- BAny bid above the offering price
- CA mandatory bid entered by all syndicate members
- DA bid used only in Rule 144A offerings
Explanation
Why A — A permissible bid entered to support the market price of a distribution security, subject to strict conditions
A permissible bid entered to support the market price of a distribution security, subject to strict conditions Stabilization is tightly regulated and generally limited to one properly identified bid at or below the public offering price. The goal is to reduce disorderly market pressure without distorting the market improperly.
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