The existence of a "bought deal" in public offerings of bonds came about as a result of
A) shelf registration.
B) a narrow underwriting spread.
C) the need of investment banks to form syndicates before underwriting an issue.
D) the need by underwriters to avoid as much risk as possible.

Question

Quizplus · Accepted Answer

The existence of a "bought deal" in public offerings of bonds came about as a result of shelf registration. Shelf registration allows companies to register securities with the SEC and offer them for sale later, generally within two years, without filing additional documents. This allows investment banks to efficiently underwrite large offerings and sell the securities to investors quickly through a "bought deal" without significant market risk.

The Existence of a "Bought Deal" in Public Offerings of Bonds