- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 1. Market Organization and Structure
- Subject 6. Primary Security Markets
CFA Practice Question
The process whereby an underwriter purchases securities from a company with the intent to resell them in an IPO is called a ______.
B. firm commitment
C. best execution
D. primary market offering
A. mezzanine offering
B. firm commitment
C. best execution
D. primary market offering
Correct Answer: B
User Contributed Comments 3
| User | Comment |
|---|---|
| kalps | It is a firm commitment as teh underwritier has purchased all the shares |
| Creg | "Mezzanine" refers to the priority level of capital on the balance sheet. It is the middle level between senior debt and common equity. Mezzanine capital usually takes the form of subordinated debt, which senior debt holders (usually banks) view as equity. |
| leftcoast | Mezzanine is also a stage of financing in venture capital |