Investment Portfolio Management

Assignment 2

Submitted to: Mr. Syed Mubashir Ali Shah

Submitted by:

Iqra Safdar

BSBA-VIII (B)

04151613058
Green Shoe

A Green shoe option is an over-allotment option in the context of an IPO. It was first used by the
Green Shoe Manufacturing Company (now part of Wolverine Worldwide, Inc.). It is typically
allowed underwriters to sell up to 15% more shares than the original issue amount. It provides
price stability and liquidity. It provides buying power to cover short positions if prices fall,
without the risk of having to buy shares if the price rises. 

Trading Halt

A trading halt is a temporary suspension of trading for a particular security or securities at one

exchange or across numerous exchanges. Trading halts are typically enacted in anticipation of a
news announcement, to correct an order imbalance, as a result of a technical glitch, or due to
regulatory concerns. When a trading halt is in effect, open orders may be canceled
and options still may be exercised.

IPO through Book Building Process

Book building is the process by which an underwriter attempts to determine at what price to offer
an initial public offering (IPO) based on demand from institutional investors. An underwriter
builds a book by accepting orders from fund managers, indicating the number of shares they
desire and the price they are willing to pay.

It is an alternative method of making a public issue in which applications are accepted from large
buyers such as financial institutions, corporations or high net-worth individual, almost on firm
allotment basis, instead of asking them to apply in public offer.