UNDERWRITING QUIZ

Complete underwriting refers to

• Underwriting only part of the issue

• Underwriting the entire issue of shares or debentures by one or more underwriters

• Underwriting with firm commitment

• Company underwriting the balance itself

In partial underwriting, any marked applications are

• Fully credited to the underwriter

• Ignored

• Shared between company and underwriter

• Credited to respective underwriter

Firm underwriting means the underwriter agrees to

• Underwrite only if issue is undersubscribed

• Take a definite number of securities regardless of public subscription

• Only marked applications

• Refuse liability for unsubscribed securities

Marked applications are those

• With company stamp

• Bearing the underwriter's stamp

• Submitted directly to company

• Unstamped forms

Applications received directly without the underwriter’s stamp are called

• Firm applications

• Marked applications

• Unmarked applications

• Pure applications

Underwriting commission is calculated on

• Net liability

• Marked applications

• Issue price of securities

• Face value only

When there is complete underwriting by a single underwriter, liability equal

• Number underwritten

• Number underwritten minus public subscriptions

• Subscriptions received

• ZERO

Maximum underwriting commission allowed under the Companies Act is

• 5% on shares and 2½% on debentures

• 10% flat

• 2.5% on shares and 5% on debentures

• 1% flat

Unmarked applications are allocated to underwriters based on

• Gross liability ratio

• Net liability ratio

• Equal distribution

• Firm underwriting only

Underwriter in this context is

• A company issuing shares

• A person or institution agreeing to buy unsubscribed securities for a commission

• A public applicant

• A broker only