Series 79 practice questioneasyGreen Shoe Option
What is the typical size of a Green Shoe (overallotment) option in an IPO as a percentage of the base offering?
- A5%
- B10%
- C15%✓ Correct answer
- D25%
Explanation
Why C — 15%
The Green Shoe option is most commonly set at 15% of the base offering size, allowing underwriters to cover over-allotments. Underestimating or overestimating this percentage is a frequent trap.
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