Firm commitment underwriting

Definition:

An underwriting in which an investment banking firm commits to buy and sell an entire issue of stock and assumes all financial responsibility for any unsold shares. Also known as bought deal.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Performance shares

Shares of stock paid out to managers only if the company makes certain sales, earnings per share, or other similar criteria.

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