If the public issue of securities is a cash offer, underwriters are usually involved. Underwriting is an important line of business for large investment firms such as Merrill Lynch. Underwriters perform services such as the following for corporate issuers:

1. Formulating the method used to issue the securities

2. Pricing the new securities

3. Selling the new securities underwriters

Investment firms that act as intermediaries between a company selling securities and the investing public.

4The terms follow-on offering and secondary offering are also commonly used.

Ross et al.: Fundamentals of Corporate Finance, Sixth Edition, Alternate Edition

VI. Cost of Capital and Long-Term Financial Policy

16. Raising Capital

© The McGraw-Hill Companies, 2002

0 0

Post a comment