When investment bankers underwrite an issue, they buy at a discounted price the entire stock issue of a firm and then sell the stock, at full price, to private investors.

Question

Quizplus · Accepted Answer

This is a correct statement about underwriting an issue. Investment bankers will purchase the entire stock issue from a company at a discounted price, and then resell the stock to private investors at full price in order to make a profit.

When Investment Bankers Underwrite an Issue, They Buy at a Discounted