The green shoe option is a clause in the underwriting agreement of an IPO, which allows to ___?

Answer: [A] Sell additional shares

The green shoe option is a clause in the underwriting agreement of an IPO, which allows to sell additional shares, usually 15%, to the public if the demand exceeds expectations and the stock trades above its offering price. This option, also known as the over-allotment provision. It gets its name from the Green Shoe company, which was the first company to allow such an option.

This question is a part of GKToday's Integrated IAS General Studies Module