In an underwritten arrangement, the investment banker assures the company coming up with a new issue of securities that the entire issue will be sold, so the investment banker bears significant risks in such an offering.

Question

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In an underwritten arrangement, the investment banker guarantees the sale of the entire issue of securities, which means they assume the risk of buying any unsold shares themselves. Therefore, they bear significant risks in such an offering.

In an Underwritten Arrangement, the Investment Banker Assures the Company