Consider the following statements:

A greenshoe option is an under-allotment option in the context of initial public offering.

A Draft Red Herring Prospectus (DRHP) is a document that is prepared to introduce a new business or product to a potential investor.

Which of the statements given above is/are correct?

Question

A greenshoe option is an over-allotment option. In the context of an initial public offering (IPO), it is a provision in an underwriting agreement that grants the underwriter the right to sell investors more shares than initially planned by the issuer if the demand for a security issue proves higher than expected.
A Draft Red Herring Prospectus (DRHP) is a document that is prepared to introduce a new business or product to a potential investor. It is a way of demonstrating value and providing investors with enough information for them to decide whether they want to invest in the company or not.

GKToday Admin · Accepted Answer

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A greenshoe option is an over-allotment option. In the context of an initial public offering (IPO), it is a provision in an underwriting agreement that grants the underwriter the right to sell investors more shares than initially planned by the issuer if the demand for a security issue proves higher than expected.
A Draft Red Herring Prospectus (DRHP) is a document that is prepared to introduce a new business or product to a potential investor. It is a way of demonstrating value and providing investors with enough information for them to decide whether they want to invest in the company or not.

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