n NISM Certifications
VII NISM Series VII
Medium

When an IPO is oversubscribed, what happens?

Practice question from NISM Series VII Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    All applicants get full allotment

  2. Shares are allotted on a lottery or proportionate basis

    Correct answer

  3. C

    IPO is canceled

  4. D

    Price increases automatically

Why this is the answer

Oversubscription leads to proportionate allocation or lottery among applicants to distribute shares fairly.

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