Question

Investment bankers ________ new issues of bonds or stocks by purchasing, at a discount, the entire stock or bond issue of a firm and selling the issue to interested investors at a higher price.

A. syndicate
B. underwrite
C. guarantee
D. sanction

Answer 1

Answer: The correct answer is "B. underwrite".

Explanation: Investment bankers underwrite new issues of bonds or stocks by purchasing, at a discount, the entire stock or bond issue of a firm and selling the issue to interested investors at a higher price.

In this way, investment banks generate their profit, acting as a financial intermediary.