When securities are issued under a firm commitment,the underwriter bears the risk of low demand from investors.

Question

Quizplus · Accepted Answer

When securities are issued under a firm commitment, the underwriter agrees to purchase the entire issue, thereby assuming the risk of low demand from investors. This means that if there is low demand, the underwriter is still obligated to purchase and pay for the entire issue.

When Securities Are Issued Under a Firm Commitment,the Underwriter Bears