SIE Exam Practice Question 650
Question: 650
Which of the following describes the process in which an underwriter intervenes in the secondary market by placing a bid for securities at or below the offering price? The goal is to protect the price from dropping if there is a lack of initial interest for a new issue.
Correct Answer: A
Explanation:
A stabilizing bid is the process in which an underwriter intervenes in the secondary market by placing a bid for securities at or below the offering price. The goal is to protect the price from dropping if there is a lack of initial interest for a new issue.
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