Meaning, Types and Advantages of Underwriting-
Meaning Of Underwriting Underwriting is an agreement whereby the underwriters (persons or institutions) ensure the company that in case the shares and debentures offered to the public, are not subscribed by the public to the extent, the balance of shares and debentures will be taken up by the underwriters, For ensuring this, the underwriter charge an agreed commission usually calculated on the issue price of shares and debentures. Thus the underwriting is a sort of guarantee or insurance given by the underwriters to the company that the shares or debentures offered to the public will be subscribed in full. Types of Underwriting Following are the main types of underwriting agreements: (i) Complete Underwriting- If the whole issue of shares or debentures of a company is underwritten, it is called complete underwriting. In such a case the whole issue is underwritten either by an individual/institution agreeing to take the entire risk or by a number of firms or institutions each agre...