Question

Recently Snowflake, Inc. had an IPO. The lead underwriter purchased all of the shares of Snowflake and resold them to the public. This is an example of ___________________ .  

A. a firm commitment underwriting

B. deploying capital

C. a Dutch auction IPO

D. a Seasoned Equity Offering

E. a best efforts underwriting

Answer 1

  

_______________________________

_______________________________

Recently Snowflake, Inc. had an IPO. The lead underwriter purchased all of the shares of Snowflake and resold them to the public. This is an example of a firm commitment underwriting.

The underwriting is done by a firm when they buy all the shares from the issuing co and then sell them to public in IPO. i.e. they gives the guarantee that all shares will be sold. If not, they will stay with the underwriting firm.

Option 1 is correct.