Explain the following terms as used in capital markets: (i) Best efforts offering. (ii) Pre-emptive rights. (iii) Green shoe provision.

      

Explain the following terms as used in capital markets:
(i) Best efforts offering.
(ii) Pre-emptive rights.
(iii) Green shoe provision.

  

Answers


Kavungya
i) Best efforts offering
This is a system used by investment bankers where they agree to sell as many securities as they
can at an established price. They have no responsibility for securities unsold.

ii) Pre-emptive right
Existing common stockholders have the right to preserve their proportionate ownership in
corporation. E.g. rights issue

iii) Green shoe provision.
Underwrites often obtain the option to purchase additional stock at the offering price.
This option usually last several weeks after the offering.
Kavungya answered the question on March 30, 2022 at 08:45


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