Investment banks form syndicates to reduce the risk involved in selling new securities.

Question

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Investment banks often form syndicates with other banks in order to spread out the risk and ensure a successful sale of new securities. The syndicate will work together to find potential buyers and distribute the securities among them. This sharing of risk also allows for larger offerings and access to a wider range of investors.

Investment Banks Form Syndicates to Reduce the Risk Involved in Selling