The risk that new securities will be sold at a loss is transferred from the issuing ﬁrm to the
underwriter in best efforts underwriting.

Name: The risk that new securities will be sold at a loss is transferred from the issuing ﬁrm to the underwriter in best efforts underwriting.
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Question

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In a best efforts underwriting, the underwriter does not guarantee the sale of the securities and thus does not assume the risk of selling them at a loss; the risk remains with the issuing firm.

The Risk That New Securities Will Be Sold at a Loss