Question

ABS Securities, a broker-dealer firm, has joined with a number of other investment banking firms in an underwriting syndicate created specifically to bring to market an initial public offering of shares for Noyes Corporation. The initial public offering is to consist of 10 million shares. The underwriting syndicate has just finished negotiating the deal with Noyes Corporation, and the IPO is to be an all or none offering. This means, for ABS Securities, that:

a. They will be required to undertake the sale of a set number securities, on a pro-rate basis, in the event that not all of the initial subscription is sold.
b. They are required to sell as many securities on Noyes Corporation as they can.
c. The proceeds of any shares sold to their clients will be placed in escrow until the entire issue is sold or the selling deadline is reached.
d. They may only sell a set number of shares, on a pro-rata basis; they cannot exceed the minimum number of shares agreed to in the deal between the underwriting syndicate and Noyes Corporation.

Answer 1

ABS Securities, as part of the underwriting syndicate, is restricted to selling a set number of shares on a pro-rata basis in the all or none initial public offering (IPO) for Noyes Corporation.

Step-by-step explanation:

ABS Securities, as part of an underwriting syndicate, has joined with other investment banking firms to bring Noyes Corporation's initial public offering (IPO) to market.

The IPO involves selling 10 million shares and is an all or none offering.

For ABS Securities, this means that they may only sell a set number of shares on a pro-rata basis and cannot exceed the minimum number of shares agreed upon in the deal between the syndicate and Noyes Corporation.