- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 43. Fixed-Income Markets: Issuance, Trading, and Funding
- Subject 2. Primary and Secondary Bond Markets
CFA Practice Question
An underwriter makes a minimal commitment to the issuer if the transaction is handled ______.
A. as a competitive bid
B. on a best-efforts basis
C. as a private placement transaction
Explanation: A best-efforts basis is where the underwriter sells the new issue for a fee, only promising to do its "best" to sell the securities. Thus, the underwriter minimizes its risk exposure.
User Contributed Comments 1
| User | Comment |
|---|---|
| Shelton | be-min, 1(p)44a, 4(s)15 |