Question: Explain what a green shoe is
Explain what a green shoe is.
Answer to relevant QuestionsWhen a company has agreed to a green shoe, who does the underwriter buy shares from if the share price drops? Who do they buy shares from if the share price increases?What is a potential risk of trying to complete a stock-based acquisition during periods of high market volatility?When might an investment bank decline participation in an underwriting and why?How are the different functions of the sell-side versus the buy-side manifested through their fee structures?Why might OTC derivatives be considered more risky than exchange-traded derivatives?
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