A Firm Commitment Arrangement with an Investment Banker Occurs When

Multiple Choice

A firm commitment arrangement with an investment banker occurs when:

A) the syndicate is in place to handle the issue.
B) the spread between the buying and selling price is less than one percent.
C) the issue is solidly accepted in the market evidenced by a large price increase.
D) when the investment banker buys the securities for less than the offering price and accepts the risk of not being able to sell them.
E) when the investment banker sells as much of the security as the market can bear without a price decrease.