ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Investment banks can facilitate this trading of securities by buying and selling the securities out of their own account and profiting from the spread between the bid and the ask price. This is called “making a market” in a security, and this role falls under “Sales & Trading.”

Detailed explanation-2: -Key Takeaways. In the primary market, new stocks and bonds are sold to the public for the first time. In a primary market, investors are able to purchase securities directly from the issuer.

Detailed explanation-3: -ü Underwritten Offering – where the investment bank guarantees the sale if the bond issue at an offering price that is negotiated with the issuer. Thus, the investment bank (called the underwriter) takes the risk associated with selling the bonds.

Detailed explanation-4: -In the securities market, underwriting involves determining the risk and price of a particular security. It is a process seen most commonly during initial public offerings, wherein investment banks first buy or underwrite the securities of the issuing entity and then sell them in the market.