Business and Personal Finance Dictionary

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

• GREEN SHOE OPTION
  
  Definition: An underwriter's right to issue more than the stated number of shares of an issue. Named after the Green Shoe Company, which was the first issuer to grant an underwriter such an option. Application: For example, if Underwriter offers 1,000,000 of ABC's shares at $10 and investors oversubscribe the issue, Underwriter can require ABC to issue another 100,000 shares at $10. Comment: It's good for Underwriter. It's good for the investors in the 100,000 shares. Not so great for the other shareholders, but two out of three ain't bad! Source: IFCI, http://risk.ifci.ch/00011628.htm.
  
  Back