In a firm commitment underwriting, the investment bank purchases the entire issue of securities from the issuer and guarantees to sell them to investors. If the securities cannot be sold at the agreed price, the underwriter bears the loss. Therefore,... Read More
In a firm commitment underwriting, the investment bank purchases the entire issue of securities from the issuer and guarantees to sell them to investors. If the securities cannot be sold at the agreed price, the underwriter bears the loss. Therefore, most of the risk lies with the investment bank.
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