In relation to a bond issue,the role of the underwriter is to:
A)Guarantee payment to bondholders of both the periodic interest payments and the maturity value.
B)Purchase the entire bond issue from the issuing corporation and then sell the bonds to the public.
C)Represent the interests of the bondholders and,if necessary,to take legal action on their behalf.
D)Maintain a subsidiary ledger of individual bondholders and mail out the periodic interest checks.

Question

Quizplus · Accepted Answer

The role of the underwriter in a bond issue is to purchase the entire bond issue from the issuing corporation and then sell the bonds to the public. The underwriter is responsible for pricing the bonds, determining the interest rate, and marketing the bonds to investors. The underwriter earns a fee for their services, which is included in the price of the bonds. While the underwriter does provide some assurance to investors that the bonds are of good quality, they do not guarantee payment to bondholders or represent their interests.

In Relation to a Bond Issue,the Role of the Underwriter