BANKING AFFAIRS

Detailed explanation-1: -Notes: When an underwriter undertakes to buy or subscribe a certain number of shares or debentures irrespective of the subscription from the public, it is called firm underwriting.

Detailed explanation-2: -There are three different types of underwriting, namely loans, securities, and insurance.

Detailed explanation-3: -In a standby agreement, the underwriter agrees to purchase any remaining shares at the subscription price, which is generally lower than the stock’s market price. This underwriting method guarantees the issuing company that the IPO will raise a certain amount of money.

Detailed explanation-4: -According to SEBI the maximum commission payable to underwriters for underwriting the shares and debentures is 2.5% of the issued price.

Detailed explanation-5: -There are several different kinds of underwriting agreements: the firm commitment agreement, the best efforts agreement, the mini-maxi agreement, the all or none agreement, and the standby agreement.