Which one of the following securities firms' activities is normally the most risky?

Question

Quizplus · Accepted Answer

A firm commitment offering is the most risky activity for a securities firm as it involves purchasing securities from the issuer and then reselling them to the public. The securities firm assumes the risk of holding unsold securities if the demand is not as high as anticipated, resulting in a loss. In contrast, a best efforts offering only tries to sell the securities and doesn't assume the risk of unsold shares. Private placement involves selling securities to a specific group of investors and is generally considered less risky. Pure arbitrage involves taking advantage of price differentials in different markets and is typically considered a low-risk strategy. Program trading involves the simultaneous buying and selling of a large basket of securities and is considered a medium- to high-risk activity.

Which One of the Following Securities Firms' Activities Is Normally