If an investment banker has agreed to sell a new issue of securities on a best-efforts basis, the issue:
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A. B. C. D.C
If an investment banker has agreed to sell a new issue of securities on a best-efforts basis, the issue:
Answer C: Results in no assumption of underwriting risk by the investment banker
Explanation: When an investment banker agrees to sell a new issue of securities on a best-efforts basis, it means that the investment banker is not committed to purchasing any unsold securities. Instead, the investment banker is only required to make the best effort to sell the securities to the public, and any unsold securities will be returned to the issuer.
In this scenario, the investment banker does not assume any underwriting risk, as they are not committing to purchase any unsold securities. This differs from a firm-commitment underwriting, where the investment banker is committed to purchasing the entire issue and assumes the risk of any unsold securities.
Options A, B, and D are not directly related to the type of underwriting and are therefore incorrect.