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In a securities underwriting a participating firm is said to be liable severally but not jointly.
What is this type of underwriting is called?
Suggested Answer: A
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a Western account. In a Western account each underwriter has a divided liability and is responsible only for his portion of the issue. In Eastern accounts, generally used for municipal issues, the underwriter is responsible for a percentage of any unsold portion. This is called an undivided liability.
27 comments · newest first
JE
Jerry
10 months ago
Just to clarify, severally means each firm is responsible for its own share.
CY
Cyndy
11 months ago
Yeah, Western account is right. No doubt about it.
FR
Frank
11 months ago
It's definitely a Western account!
JO
Johnna
11 months ago
I thought it was an Eastern account, though?
MI
Micaela
11 months ago
Really? I’m surprised it’s not a best efforts offering.
DA
Dallas
11 months ago
Could it be an all or none offering? I’m confused about the differences between these terms.
ME
Merlyn
12 months ago
I practiced a question like this, and I feel like the answer is definitely not a best efforts offering.
MA
Maurine
12 months ago
I’m not too sure, but I remember something about Eastern accounts being more about joint liability.
KE
Kenneth
1 year ago
I think this might be a Western account since it’s the one where firms are liable severally.
MA
Maybelle
1 year ago
I'm pretty confident the answer is C, a best efforts offering, where the participating firms are liable severally but not jointly.
AN
Antione
1 year ago
Ah yes, I know this type of underwriting. It's called a "best efforts offering" if I'm not mistaken.
RA
Rasheeda
1 year ago
Okay, let me see... I remember learning about different types of securities underwriting, I just need to recall the specifics.
HA
Haydee
1 year ago
Hmm, I'm a bit unsure about this one. I'll need to think it through carefully.
RO
Ronny
1 year ago
This question seems straightforward, I think I know the answer but I'll double-check the details.
DE
Deane
1 year ago
A) a Western account? Isn't that where they, like, ride horses and lasso the securities or something? Just kidding, but this question is really making me yearn for a nice cold beverage.
TA
Tayna
1 year ago
Ha! This question is making my head spin. Maybe I should've paid more attention in my 'Securities Underwriting for Dummies' class. Oh well, I'll just guess and hope for the best.
LA
Lauran
1 year ago
This is a tricky one! I'm going to have to go with B) an Eastern account. Sounds more like the type of underwriting where the liability is shared, not individual.
LE
Leatha
1 year ago
No, I'm pretty sure it's D) an all or none offering.
DO
Dottie
1 year ago
I think it's actually C) a best efforts offering.
MA
Marti
1 year ago
Actually, Emilio, in an all or none offering, the underwriter is responsible for selling all the shares. So I still think it's C) a best efforts offering.
TR
Troy
1 year ago
Hmm, I'm not too sure about this one. But I'd go with D) an all or none offering. Isn't that when the underwriter has to sell all the securities or none at all?
EM
Emilio
1 year ago
I'm not sure, but I think it might be D) an all or none offering.
RA
Raymon
1 year ago
I think the answer is C) a best efforts offering. That's when the underwriter doesn't guarantee the full sale of the securities, right?
EM
Emogene
1 year ago
That's right. It means the underwriter is only making their best effort to sell the securities, but there is no guarantee of full sale.
RO
Rosalind
1 year ago
Yes, you are correct. In a best efforts offering, the underwriter does not guarantee the full sale of the securities.
DU
Dudley
1 year ago
I agree with Marti, because in a best efforts offering, the underwriter is not responsible for any unsold shares.
MA
Marti
1 year ago
I think the answer is C) a best efforts offering.