In a __________ underwriting arrangement,the underwriter assumes the full risk that shares may not be sold to the public at the stipulated offering price.

Question

Quizplus · Accepted Answer

In a firm commitment underwriting arrangement, the underwriter assumes the full risk of unsold shares, thereby agreeing to purchase all the shares from the issuer and selling them to the public at the stipulated offering price. This type of underwriting provides the issuer with certainty of funds raised, but also places a greater risk on the underwriter.

In a __________ Underwriting Arrangement,the Underwriter Assumes the Full Risk