An underwriting arrangement whereby an investment banking firm or group of firms offers a potential issuer of debt securities a firm bid to purchase a specified amount of the securities with a certain coupon rate and maturity is known as:
A) Firm commitment underwriting.
B) Bought deal.
C) Dutch auction.
D) Underwriting process.
E) None of the above.

Question

Quizplus · Accepted Answer

A "bought deal" is when an investment bank or group of banks offers to purchase the entire issue of securities from the issuer at a set price, coupon rate, and maturity, providing certainty to the issuer.

An Underwriting Arrangement Whereby an Investment Banking Firm or Group