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Hey Guys could anyone pls explain to me What are underwriters?
I read an answer to a question that if a right issue is not fully subscribed and a significant number of shares remain with the underwriters, THIS will depress the share price. why is this so?Hi Sabrina,
Im not quite sure (sorry) but I read the same and after lokking at the question my impression is that an underwriter is someone taking the responsibility to buy shares if these are not sold. In that Question I believe that the company would buy the shares that are not bought by the public.
Anyone has another explanation please?
Amarain
Im not quite sure (sorry) but I read the same and after lokking at the question my impression is that an underwriter is someone taking the responsibility to buy shares if these are not sold. In that Question I believe that the company would buy the shares that are not bought by the public.
Anyone has another explanation please?
Amarain
According to me ur rite
Im with you regarding to the definition. And I saw in the BPP that says people will lose confidence of the future prospects of the company if shares issued are not fully subscribed. That’s why deep discount issue is introduced i guess especially in volatile economic situation.
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The definition is given in chp12 sources of finance pg 215 bpp text
Hey guys thanks a lot for replying
I know our day is tomorrow but let me get this straight
If the share are not fully subscribed from the underwriters
Then the company would buy it back or would force to sell the share at a deep discount issue i guess if this is the case then indeed it will depress the share priceGood luck Guys and thks again
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