An underwriting agreement is a contract in which the investment banker agrees to do its best to sell securities to investors at the highest price it can; the investment banker assumes no risk for the possibility that it may fail to issue all authorized shares .

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In an underwriting agreement, the investment banker typically agrees to buy the securities from the issuer and then sell them to the public, assuming the risk of not being able to sell all the shares. This is different from a "best efforts" agreement where the banker would try to sell the securities without assuming the risk of unsold shares.

An Underwriting Agreement Is a Contract in Which the Investment