The process by which investment banks guarantee a certain price to a firm issuing stocks or bonds is known as:
A)underwriting
B)securitization
C)proprietary trading
D)microlending

Question

Quizplus · Accepted Answer

Underwriting is the process by which investment banks guarantee a certain price to a firm issuing stocks or bonds. This involves the investment bank agreeing to purchase all the securities being offered by the firm and reselling them to the public at a higher price, thus enabling the firm to raise the funds it needs. Securitization involves creating a security by pooling various financial assets and selling them to investors. Proprietary trading involves the investment bank trading securities for its own account. Microlending involves providing small loans to individuals or small businesses in developing countries.

The Process by Which Investment Banks Guarantee a Certain Price