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Suppose you are the lead underwriter for a start - up company. The company plans to sell 1 0 million shares at the price of
Suppose you are the lead underwriter for a startup company. The company plans to sell million shares at the price of $ per share. It also provides you an overallotment option of million additional shares. Recent road show estimates demand to be around million shares at $ There is lots of uncertainty about how the stock will perform after trading starts. Consider the following decisions. After trading starts, what will you do if the stock price increases to $ a Ask investors to buy shares from the market. b Sell shares back to the Issuing company. c Exercise Green shoe option. d Do nothing. e Ask investors to sell stock to depress stock price
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