A security issued in which the underwriter does not guarantee a firm price to the issuer and acts more as a placing or distribution agent for a fee is referred to as:
A) negotiated sale.
B) competitive sale.
C) best efforts underwriting.
D) none of the options.

Question

Quizplus · Accepted Answer

In a best efforts underwriting, the underwriter agrees to sell as much of the issue as possible at the agreed-upon offering price but does not guarantee the sale of the entire issue. This contrasts with a firm commitment underwriting, where the underwriter guarantees the sale of the entire issue at a specific price.

A Security Issued in Which the Underwriter Does Not Guarantee