An underwriter will usually take the entire bond issue and sell it to their customers on the secondary bond market.

An underwriter will usually take the entire bond issue and sell it to their customers on the secondary bond market.

• A. Not stated
• B. Not applicable
• C. False
• D. True

Answer: (D)

In bond issuance, investors buy new issues in the primary market, while the secondary market is where existing bonds trade among investors after issuance. In a firm commitment underwriting, the underwriter purchases the entire issue from the issuer and then sells it to investors in the primary market at the offering price. The underwriter does not typically distribute the new issue to customers on the secondary market as part of the underwriting; that market activity occurs after issuance and involves trading between investors, often facilitated by brokers. So the statement is not correct because the primary arrangement is distribution in the primary market, not the secondary.

In bond issuance, investors buy new issues in the primary market, while the secondary market is where existing bonds trade among investors after issuance. In a firm commitment underwriting, the underwriter purchases the entire issue from the issuer and then sells it to investors in the primary market at the offering price. The underwriter does not typically distribute the new issue to customers on the secondary market as part of the underwriting; that market activity occurs after issuance and involves trading between investors, often facilitated by brokers. So the statement is not correct because the primary arrangement is distribution in the primary market, not the secondary.