Question

A health and fitness startup company goes for an initial public offering. For assistance, it enters into a firm commitment arrangement with an investment bank. As per the agreement, the investment bank itself will purchase all the shares at a specified price. This will guarantee that the company will receive a fixed amount of new funds. This scenario exemplifies a(n) _____.

Answer 1

"Underwriting " is the correct answer.

Step-by-step explanation:

• Underwriting seems to be the mechanism whereby an entity or organization assumes an investment burden at a cost, is indeed the mechanism for a mortgage company to determine the danger of extending credit to customers.
• The above word stemmed from the custom of making increasing uncertainty-taker put their names below the total degree of responsibility individuals were inclined to acknowledge for something like a defined bonus.

So that the above is the appropriate answer.