Where a company wants to guarantee all of its issue of commercial paper,it can arrange for it to be:
A) sold by tender.
B) underwritten.
C) sold by tap.
D) sold with a face value less than $10 000.

Question

Quizplus · Accepted Answer

Underwriting is a process in which a financial institution guarantees to purchase all the shares or bonds offered by a company. In the case of commercial paper, underwriting is also an option for companies that want to ensure the sale of their entire issue. This means that the underwriter will purchase the entire issue and sell it to investors. This provides certainty to the company and peace of mind to the investors. Therefore, option B is the best choice for a company that wants to guarantee all of its issue of commercial paper.

Where a Company Wants to Guarantee All of Its Issue