|
|
Underwriting income |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Underwriting incomeFor an insurance company, the difference between the premiums earned and the costs of settling claims.Underwriting income Similar MatchesUnderwriting CommissionUnderwriting CommissionThe fee investment bankers charge for underwriting a security issue. All or none underwritingAll or none underwritingAn arrangement whereby a security issue is cancelled if the underwriter is unable to resell the entire issue. Firm commitment underwritingFirm commitment underwritingAn underwriting in which an investment banking firm commits to buy and sell an entire issue of stock and assumes all financial responsibility for any unsold shares. Underwriting feeUnderwriting feeThe portion of the gross underwriting spread that compensates the securities firms that underwrite a public offering for their services. UnderwritingUnderwritingA bank or other financial institution's guarantee to a company that it will buy a certain number of shares in a company's new issue or rights issue, should the issue not be fully subscribed by other investors.From the company's point of view, having its new issue underwritten is a form of insurance. It means that if it has priced an issue too high and the market shuns it, the company can still be sure that it will get money from the new issue.Of course, security comes at a price. Underwriters charge a fee for the back-up they provide. If the new issue is very popular, it will pocket that fee and make a handsome profit. Occasionally, they get badly burned. New issues underwritten immediately before the 1987 stock market crash lost a lot of money.Sometimes companies do a rights issue at a deep discount to reduce the underwriting fees. Further SuggestionsUnderwriting spreadNegotiated underwriting Underwriting syndicate Underwriting Underwriting agreement |
|
|
|