In marketing a new security issue, the investment banker assumes the risk of not being able to sell the security at a favorable price in each of the following cases except:
A)a best efforts offering
B)a negotiated underwriting
C)a competitively bid underwriting
D)assumes the risk in all of the above

Question

Quizplus · Accepted Answer

In a best efforts offering, the investment banker only agrees to use its best efforts to sell the security, but does not assume any financial risk if the security cannot be sold. However, in a negotiated or competitively bid underwriting, the investment banker assumes the risk of not being able to sell the security at a favorable price. Therefore, the correct answer is A.

In Marketing a New Security Issue, the Investment Banker Assumes