Question

A Dutch auction underwriting is best described as an underwriting in which: Select one: a. the offering price varies with each investor paying his or her bid amount. b. investors determine the amount of the spread via competitive bidding. c. the number of shares sold is determined by a public auction. d. the underwriters are committed to purchase any unsold shares. e. the offer price is set based on competitive bidding by investors.

Answer 1

e. The offer price is set based on competitive bidding by investors.

Step-by-step explanation:

A Dutch Auction Underwriting is a form of public auction wherein, several investors make their bidding and then, the highest price is the amount at which the offering would be sold. This is a form of competitive bidding among the investors. The auctioneers wait for all the investors to make their bidding before selecting the highest.

Sometimes also in Dutch Auction, the price tag could be reduced, till there is a buyer for it. Once the going price is good enough by the bidder, the auction can then come to a successful end. Investment bankers are the underwriters in a public offering like this and they determine the prices of the items being sold.

Answer 2

Answer: the offer price is set based on competitive bidding by investors.

Explanation: A Dutch auction is defined as a type of reverse auction that starts at a high price that is gradually reduced by the auctioneer until someone is willing to buy or when it reaches it predetermined price.

Here, the price is determined based on competitive bidding by investors.