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Assume the offer price for an IPO is set at $25 per share and the shares issued in the IPO is 10 million. The lead

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Assume the offer price for an IPO is set at $25 per share and the shares issued in the IPO is 10 million. The lead underwriter, however, sells 11.5 million shares to investors at the $25 offer price, planning to use the overallotment option, if needed, to satisfy its short position. Assume that the IPO firm's stock starts trading on the stock exchange at either $23 per share or $27 per share. In which of these two possible stock prices will the lead underwriter most likely exercise its overallotment option? A. If the stock starts trading at $23 per share. B. If the stock starts trading at $27 per share

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