With firm commitment underwriting, the issuing firm:

-Is unsure of the number of shares it will actually issue until after the offering is completed.

-Knows upfront the amount of money it will receive from the stock offering.

-Is unsure of the total amount of funds it will receive until after the offering is completed.

-Knows exactly how many shares will be purchased by the general public during the offer period.

-Retains the financial risk associated with unsold shares.

Knows upfront the amount of money it will receive f

Question

Jordan Johnston

Business

10 August, 03:42

With firm commitment underwriting, the issuing firm:

-Is unsure of the number of shares it will actually issue until after the offering is completed.

-Knows upfront the amount of money it will receive from the stock offering.

-Is unsure of the total amount of funds it will receive until after the offering is completed.

-Knows exactly how many shares will be purchased by the general public during the offer period.

-Retains the financial risk associated with unsold shares.

Knows upfront the amount of money it will receive f

+2

Answers (1)

Know the Answer?

Darwin Harrell · Answer 1

With firm commitment underwriting, the issuing firm: Knows upfront the amount of money it will receive from the stock offering.

Explanation:

A follow-up bid is a issuance of the stock after the company's initial public bid (often, but wrongly called a secondary deal). The number of outstanding shares is raised and this results in a dilution of the earnings per share as new shares are generated and then sold by the company.

For example, a business had 1,000 stock shares of $100 per share. Therefore, the worth of the whole company prior to the bid is 1,000x 100 or 100,000 dollars. The firm would gain $90,000 in the deal if it sells a secondary 1,000 share at $90 per share.