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 |