Which of the following is a security issue in which the investment bank guarantees the issuer a price for newly issued securities by buying the whole issue at a fixed price from the security issuer, and where the investment bank then seeks to resell the securities to investors at a higher price?
A) best efforts underwriting
B) firm commitment underwriting
C) underwriter's spread
D) venture capital

Question

Quizplus · Accepted Answer

This refers to firm commitment underwriting where the investment bank takes on the risk of guaranteeing a price for the newly issued securities, and seeks to resell them at a higher price. This can be a security issue if the investment bank is not able to resell the securities at a profit, leading to potential losses.

Which of the Following Is a Security Issue in Which