Question

In a firm commitment (bought deal) type of underwriting of a Eurobond offering:

In a firm commitment (bought deal) type of underwriting of a Eurobond offering:

Homework Answers

Answer #1

In bought deal type of underwriting of a eurobond offering an investment bank commits to buy the entire offering of euro bond from the company. In this type of underwriting the investment bank takes all the risk of selling the offering. It buys all the bonds/ shares from the company and himself sells them in market.

As the all the financial risk of offering is undertaken by the investment bank it negotiates over the price and buys from the company at discount to sell them in market to make a profit.

If the deal is large, an investment bank group up with other investment banks and form a syndicate to decrease the portion of risk on each bank (to share the risk).

Hope it helps!

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
With firm commitment underwriting, the issuing firm is sure of the total amount of funds it...
With firm commitment underwriting, the issuing firm is sure of the total amount of funds it will receive at the time of offering because the underwriting firm buys the entire issue and assumes full financial responsibility. And explain the reason. a. True b. False
Reliant Underwriters has agreed to a firm commitment underwriting in which they will pay $36.75 million...
Reliant Underwriters has agreed to a firm commitment underwriting in which they will pay $36.75 million in exchange for 3 million shares of stock for an IPO offering. The offering price is expected to be $13.50 a share. How much will the underwriters earn if all of the shares can be sold? $1.25 million $2.75 million $3.75 million $4.25 million $4.50 million
Which one of the following terms is defined as an underwriting for which the underwriters assume...
Which one of the following terms is defined as an underwriting for which the underwriters assume full responsibility for any unsold shares? 1) Initial public offering 2) Best efforts underwriting 3) Firm commitment underwriting 4) Rights offer 5) Private placement
All of the following statements about stand-by (firm commitment) underwriting are true EXCEPT: Select one: A....
All of the following statements about stand-by (firm commitment) underwriting are true EXCEPT: Select one: A. The investment banker guarantees the issuer a fixed amount of money from the share sale. B. The investment banker actually buys the shares from the company. C. The issuer bears the risk that the resale price might be lower than the price the underwriter pays. D. The underwriter bears the risk that the resale price might be lower than the price the underwriter pays.
You are negotiating with your underwriters in a firm commitment offering of 11 million primary shares....
You are negotiating with your underwriters in a firm commitment offering of 11 million primary shares. You have two​ options: set the IPO price at ​$21.00 per share with a spread of 6​%, or set the price at ​$20.30 per share with a spread of 3 %. Which option raises more money for your​ firm? The net price to the firm of the first option is ​$ nothing
10. The difference between the price an underwriter pays an issuer and the underwriter's offering price...
10. The difference between the price an underwriter pays an issuer and the underwriter's offering price is called the: A. spread. B. margin. C. offer differential. D. firm commitment. E. underwriting capital.
3. What the difference is between a firm commitment and a best efforts bond issue offering?...
3. What the difference is between a firm commitment and a best efforts bond issue offering? Clearly state your answer to each problem. Answers without justification/explanation will not be given credit Clearly state your answer to each problem. Answers without justification/explanation will not be given credit
Match the following type of underwriting with its description below. Write the correct letter next to...
Match the following type of underwriting with its description below. Write the correct letter next to the corresponding question. A) Best effort B) All or none C) Firm commitment D) Stand by 29. Investment Banker will do his/her best to sell all of the shares of the new issue but will buy any balance that was not sold ______ 30. Investment Banker will do all he/she can to sell all of the shares of new issue _____ 31. Investment Banker...
In a typical underwriting arrangement, the investment banking firm I) sells shares to the public via...
In a typical underwriting arrangement, the investment banking firm I) sells shares to the public via an underwriting syndicate. II) publicizes the offering and gauges investment demand. III) assumes the full risk that the shares may not be sold at the offering price. IV) agrees to help the firm sell the issue to the public, but does not actually purchase the securities.   I and II only II and IV only I, II, and III only I, II, and IV only...
The Boat Works decided to go public by offering a total of 135,000 shares of common...
The Boat Works decided to go public by offering a total of 135,000 shares of common stock to the public. The company hired an underwriter who arranged a firm commitment underwriting and an initial selling price of $24 a share with a spread of 8.3 percent. As it turned out, the underwriters only sold 122,400 shares to the public. What is the amount paid to the issuer?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT