CFA Practice Question

CFA Practice Question

Which one of the following is false?
A. Corporate bond issues are almost always sold through a negotiated arrangement with an investment bank.
B. Equity sold on 'best-efforts basis' are underwritten by the investment bank handling the issue.
C. SEOs are new equity sold by existing firms.
Explanation: Best-effort basis are typically for speculative new issues where the investment bank does not take the risk. It acts like a broker and sells whatever it can at a stipulated price.

User Contributed Comments 1

User Comment
harrybay Underwriting means taking on the risk
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