Question

Keegee Corp. associates itself with an investment bank to issue some new stock. The bank has agreed to help the company develop a pricing strategy and to help find buyers for the stock. However, the bank has not guaranteed that all of the shares will be sold at the desired price. Keegee's investment bank is using the _____ approach to raise funds.

Answer 1

Answer: Keegee's investment bank is using the best efforts approach to raise funds.

Step-by-step explanation:

Here the investment bank and Keegee Corp. have signed the best efforts legal agreement. The investment has agreed to sell the maximum possible shares of the company to the public but does not assures to sell them completely.

The agreement also has the minimum amount of shares that are going to be sold by the investment banker. Once the minimum amount of shares are sold the investment banker is not responsible for the unsold shares. This is a legal approach and known as best efforts approach.