SIE Exam Practice Question 835
Question: 835
Which of the following is an agreement between the issuer of a security and its underwriters stating that the underwriters are responsible for any unsold portion of the issue? This transfers the risk of the unsold portion of the issue from the issuer to the underwriters.
Correct Answer: C
Explanation:
Standby underwriting is an agreement between the issuer of a security and its underwriters stating that the underwriters are responsible for any unsold portion of the issue. This transfers the risk of the unsold portion of the issue from the issuer to the underwriters.
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