A local government agency of Minnesota issued municipal securities for the purpose of building a community hospital.Austin Hunter Corp)a financial services company,decides to purchase these securities from the government and resell them to the investing public.Which of the following describes the process undertaken by Austin Hunter Corp.?

Question

Quizplus · Accepted Answer

Underwriting is the process by which investment bankers (in this case, Austin Hunter Corp.) purchase securities from the issuer (the local government agency) and resell them to the investing public. This process involves the investment bank assuming the risk of distributing the securities in the market.

A Local Government Agency of Minnesota Issued Municipal Securities for the Purpose