Why might a bookrunner allocate fewer shares to a hedge fund that requested a very large order than to a smaller long-only institution?

1. AHedge funds are legally barred from IPO allocations
2. BSmaller investors always pay higher commissions
3. CFINRA requires equal share allocations to all orders
4. DLong-only investors may be viewed as more supportive of stable aftermarket trading✓ Correct answer

Reading one answer is not the same as being ready

Lucky the Banker is a free practice app with 477+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.

• What does it mean to tighten an IPO price range upward during marketing?
• What is the main purpose of a roadshow in an IPO?
• What is the underwriting spread in an equity offering?
• If an IPO order book is multiple times oversubscribed by high-quality long-only investors, what pricing implication is…