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“Explain the role of investment banks in the underwriting process?”200 words

“Explain the role of investment banks in the underwriting process?”200 words

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Answer #1

Investment banks are a link between investors and other corporations through the process of Initial Public Offer (IPO). Investment banks provide all the underwriting services which are needed when a new stock is issued in the market. In this process, the investment bank buys a certain sum of shares and then resells it through the stock exchange itself.

The investment bank's role is to finance and make arrangements for all the distribution of the issue of shares. These investment banks help to share the risk of loss. It makes a company assured of the fact that money will be raised even when some shares will be unsold in the end.

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