Series 24- Underwriting
IPO - correct answer ✔Initial public offering, a corporation's first offer to sell
shares to the public
follow-on offering - correct answer ✔the sale to the public of additional newly
created shares by a company the is already public
underwriting syndicate - correct answer ✔a group of other bankers formed
by an investment banker to share the financial risk associated with
underwriting new securities
firm commitment underwriting - correct answer ✔the type of underwriting in
which the underwriter buys the entire issue, assuming full financial
responsibility for any unsold shares
Best Efforts Underwriting - correct answer ✔the type of underwriting in which
the underwriter sells as much of the issue as possible, but can return any
unsold shares to the issuer without financial responsibility
best efforts all or none underwriting - correct answer ✔underwriters act as
agents for the issuer and attempt to sell as much of the offering as possible,
however, if the entire issue is not sold any sales that had been made must be
cancelled and the money returned to subscribers
Best Efforts Mini-Maxi underwriting - correct answer ✔issuer sets a minimum
threshold of sales that must be met in order so that the offering is not
cancelled.
, Standby Underwriting - correct answer ✔Syndicate agrees to buy any shares
that are not purchased by the stockholders in rights offering
syndicate manager - correct answer ✔managing underwriter; invites other
broker dealers to participate in distribution
syndicate agreement - correct answer ✔an agreement among underwriters
which will set forth the terms of the offering and each underwriter's percentage
participation in the offering and sale. role is guarantee the sale
Selling Group - correct answer ✔other brokerage firms that help the
underwriting syndicate sell issue to the public. do NOt assume financial
liability, act as placement agents
Green Shoe Clause - correct answer ✔allows underwriters to buy additional
shares from the issuer and sell those shares (maximum of 15%) if an issue is
oversubscribed.
Market-Out Clause - correct answer ✔Escape clause sometimes written into
underwriting agreements which allows the underwriters to be released from
their purchase commitment if material adverse developments affect the
securities markets.
at-the-market offering - correct answer ✔issuers with existing shares can use
this offering to raise capital and issue shares over an extended period, rather
than all at once. Only for companies eligible to use Form S-3 or F-3. Pricing
based on current secondary market value of the company's existing shares
Jump Ball Basis - correct answer ✔this process sets aside shares for
institutional clients and allows all members to compete for orders
IPO - correct answer ✔Initial public offering, a corporation's first offer to sell
shares to the public
follow-on offering - correct answer ✔the sale to the public of additional newly
created shares by a company the is already public
underwriting syndicate - correct answer ✔a group of other bankers formed
by an investment banker to share the financial risk associated with
underwriting new securities
firm commitment underwriting - correct answer ✔the type of underwriting in
which the underwriter buys the entire issue, assuming full financial
responsibility for any unsold shares
Best Efforts Underwriting - correct answer ✔the type of underwriting in which
the underwriter sells as much of the issue as possible, but can return any
unsold shares to the issuer without financial responsibility
best efforts all or none underwriting - correct answer ✔underwriters act as
agents for the issuer and attempt to sell as much of the offering as possible,
however, if the entire issue is not sold any sales that had been made must be
cancelled and the money returned to subscribers
Best Efforts Mini-Maxi underwriting - correct answer ✔issuer sets a minimum
threshold of sales that must be met in order so that the offering is not
cancelled.
, Standby Underwriting - correct answer ✔Syndicate agrees to buy any shares
that are not purchased by the stockholders in rights offering
syndicate manager - correct answer ✔managing underwriter; invites other
broker dealers to participate in distribution
syndicate agreement - correct answer ✔an agreement among underwriters
which will set forth the terms of the offering and each underwriter's percentage
participation in the offering and sale. role is guarantee the sale
Selling Group - correct answer ✔other brokerage firms that help the
underwriting syndicate sell issue to the public. do NOt assume financial
liability, act as placement agents
Green Shoe Clause - correct answer ✔allows underwriters to buy additional
shares from the issuer and sell those shares (maximum of 15%) if an issue is
oversubscribed.
Market-Out Clause - correct answer ✔Escape clause sometimes written into
underwriting agreements which allows the underwriters to be released from
their purchase commitment if material adverse developments affect the
securities markets.
at-the-market offering - correct answer ✔issuers with existing shares can use
this offering to raise capital and issue shares over an extended period, rather
than all at once. Only for companies eligible to use Form S-3 or F-3. Pricing
based on current secondary market value of the company's existing shares
Jump Ball Basis - correct answer ✔this process sets aside shares for
institutional clients and allows all members to compete for orders
