A security issued in which the underwriter does not guarantee a firm price to the issuer and acts more as a placing or distribution agent for a fee is referred to as:
A)negotiated sale.
B)competitive sale.
C)best efforts underwriting.
D)none of these.

Question

Quizplus · Accepted Answer

In best efforts underwriting, the underwriter does not guarantee a firm price and acts more as a placing or distribution agent for a fee. This means that the underwriter will make their best effort to sell as many securities as possible at the highest price possible, but they are not obligated to purchase any unsold securities themselves. This differs from a negotiated sale or competitive sale in which the underwriter guarantees a firm price to the issuer.

A Security Issued in Which the Underwriter Does Not Guarantee