The firm commitment process is the most common practice for IPOs.

Question

Quizplus · Accepted Answer

The firm commitment process is indeed the most common practice for initial public offerings (IPOs). In this process, underwriters agree to purchase all the shares being offered by the company at a guaranteed price, and then sell those shares to the public. This provides the company with a guaranteed amount of funds and transfers the risk of unsold shares to the underwriters.

The Firm Commitment Process Is the Most Common Practice for IPOs