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Sagot :
The investment bank helps stabilize the price of new issues in the secondary market by purchasing shares in the open market.
It is done by the investments banks in the form of stabilizing bid.
A stabilizing bid is a purchase of the stocks by underwriters to stabilize or support the secondary market price of a security immediately by following an initial public offering (IPO).
After an IPO, the price of the newly issued shares may falter or they can be shaky in trading.
Process of making a stabilizing bid involves buying back shares that were oversold or shorted in an effort to create an extra source of demand for newly-issued shares and stabilize the stock price.
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