Asked by courtney mitchell on Jun 06, 2024
Verified
A local government agency of Minnesota issued municipal securities for the purpose of building a community hospital.Austin Hunter Corp) a financial services company,decides to purchase these securities from the government and resell them to the investing public.Which of the following describes the process undertaken by Austin Hunter Corp.?
A) Tombstone
B) Underwriting
C) Limit order
D) Check clearing
Underwriting
The process by which insurers or lenders assess the risk of a potential client, deciding whether to accept the risk and on what terms, thereby determining the premium or interest rate.
Tombstone
A stone marker, typically inscribed, placed over a grave.
Limit Order
Order that puts a ceiling or floor on a security purchase or sale.
- Describe the process of security issuance and the distinction between primary and secondary markets.
Verified Answer
AZ
alejandro zelayaJun 09, 2024
Final Answer :
B
Explanation :
Underwriting is the process by which investment bankers (in this case, Austin Hunter Corp.) purchase securities from the issuer (the local government agency) and resell them to the investing public. This process involves the investment bank assuming the risk of distributing the securities in the market.
Learning Objectives
- Describe the process of security issuance and the distinction between primary and secondary markets.