Which of the following statements is correct?
A) Most often, corporate bonds are offered publicly through investment banking firms such as underwriters which use a best effort underwriting.
B) In a competitive sale, the bond-issuing firm invites bids from a number of institutional buyers such as mutual funds and pension funds.
C) In a negotiated sale, a consortium of investment banks obtains the right to originate, underwrite, and distribute the new bonds through a Dutch auction process.
D) None of the statements are correct.

Question

Quizplus · Accepted Answer

None of the statements are correct. Corporate bonds are typically underwritten through a firm commitment underwriting, not a best effort. Competitive sales involve bids from underwriters, not institutional buyers. Negotiated sales do not use a Dutch auction process.

Which of the Following Statements Is Correct