Underwritten arrangement
Revision as of 14:37, 27 October 2019 by Gary (talk | contribs) (Created page with "Underwritten arrangement is a contract between a firm and an investment banker when stock is issued. An investment banker agrees to buy the entire issue at a set price...")
Underwritten arrangement is a contract between a firm and an investment banker when stock is issued. An investment banker agrees to buy the entire issue at a set price and then resells the stock at the offering price. Thus, the risk of selling the issue rests with the investment banker.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Underwritten arrangement. Contract between a firm and an investment banker when stock is issued. An investment banker agrees to buy the entire issue at a set price and then resells the stock at the offering price. Thus, the risk of selling the issue rests with the investment banker.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
