In a best-efforts offering, the underwriters will suffer a financial loss if the offer price is set too high.

Question

Quizplus · Accepted Answer

In a best-efforts offering, the underwriters do not guarantee the sale of all the offered securities and they do not buy any unsold securities. Therefore, they do not suffer a financial loss if the offer price is set too high. Instead, the issuer may not raise the intended amount of capital.

In a Best-Efforts Offering, the Underwriters Will Suffer a Financial