An underwritten issue of common stock is one in which a firm purchases insurance to cover unexpected losses suffered by shareholders.

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An underwritten issue of common stock is when an investment bank acts as an intermediary between the company issuing the stock and the investors purchasing it. The investment bank guarantees the sale of the shares by purchasing them from the company and reselling them to the public at a slightly higher price, thus assuming the risk of not being able to sell all the shares. There is no insurance purchased to cover unexpected losses suffered by shareholders.

An Underwritten Issue of Common Stock Is One in Which