In firm commitment underwriting, the investment banker acts as a principal, purchasing securities from the issuer at one price and seeking to place them with public investors at a slightly higher price.

Question

Quizplus · Accepted Answer

In a firm commitment underwriting, the investment banker assumes the risk by acting as a principal and purchases securities from the issuer at a set price, and then sells them to the public at a slightly higher price to make a profit.

In Firm Commitment Underwriting, the Investment Banker Acts as a Principal