Which of the following is NOT true about the underwriting services provided by investment banks?
A)The most common approach to issuing securities in Australia is on a 'best efforts' basis.
B)Share issues require the preparation of a prospectus.
C)In addition to the best efforts contract, issuers can also enter into a standby underwriting agreement.
D)Under the best efforts method, the underwriter will acquire all unsold securities.
E)Investment bank fees for underwriting services are usually in the form of a commission.

Question

Quizplus · Accepted Answer

Under the best efforts method, the underwriter is not obligated to acquire all unsold securities. Instead, they make their best effort to sell as many securities as possible but it is the issuer's responsibility to find buyers for any unsold securities.

Which of the Following Is NOT True About the Underwriting