Which of the following is the best definition of an overallotment option?

Multiple Choice

The part of the underwriting contract that specifies how long insiders must wait after an IPO before they can sell stock.

Situation where the underwriter buys the entire issue, assuming full financial responsibility for any unsold shares.

The purchase of securities from the issuing company by an investment banker for resale to the public.

An underwriting provision that permits syndicate members to purchase additional shares at the original offering price.

The type of underwriting in which the offer price is set based on competitive bidding by investors. Also known as a uniform price auction.