FINRA Series 7 quiz

What circumstance is a market-out clause most likely to be utilized by an underwriter?

Market-out clauses are typically placed in underwriting contracts to avoid liability from unforeseen market circumstances. If an event or circumstance creates an adverse market environment (like a large market correction) the underwriter can enact the market-out clause and cancel the offering. A market correction is a quick and large drop in overall market values.