An arrangement whereby an investment banker agrees to purchase an entire new issue of securities is called ____.
A) competitive bidding
B) syndication
C) a negotiated bid
D) underwriting

Question

Quizplus · Accepted Answer

This is known as "underwriting" where the investment banker agrees to purchase the entire new issue of securities from the issuing company and then sells them to investors for a profit. This provides a guarantee of funds for the issuing company, but also transfers the risk of the investment to the underwriter.

An Arrangement Whereby an Investment Banker Agrees to Purchase an Entire