Final answer:
The term for an agreement where an investment banker buys an entire issue of securities and sells them to the public is known as an underwriting.
Step-by-step explanation:
When an investment banker agrees to purchase an entire issue of securities from the issuing corporation and then sell them to the general public, the agreement is known as an underwriting. In this process, the investment banker, typically through a syndicate, buys the entire new issue of securities at a predetermined price and takes on the risk of selling the securities to investors for a potentially higher price. This contrasts with a best efforts agreement, where the banker agrees to sell as much of the issue as possible without guaranteeing the entire issue will be sold.
In an underwriting agreement, an investment banker commits to purchasing an entire issue of securities from a corporation and subsequently selling them to the public. Usually done through a syndicate, the investment banker acquires the entire new security issue at a prearranged price, assuming the risk of selling the securities to investors at a potentially higher price. This arrangement provides the issuing corporation with more certainty regarding the funds it will raise, as the investment banker bears the responsibility of selling the entire issue.
This differs from a best efforts agreement, where the investment banker commits to selling as much of the security issue as possible without guaranteeing the complete sale. Underwriting offers a more secure and definitive method for corporations to raise capital, transferring the selling risk from the issuer to the investment banker and the syndicate involved in the underwriting process.