SIE Exam Question 464: Answer and Explanation

Question: 464

A company doing a preemptive rights offering would most likely use what type of underwriting agreement?

• A. Firm commitment.
• B. Best efforts.
• C. Standby.
• D. All or none.

Correct Answer: C

Explanation:

C: A company doing a rights offering will use a standby underwriting agreement whereby the underwriter will "standby" ready to purchase any shares not purchased by shareholders.