What Is "Firm Commitment" Underwriting

question 32

Multiple Choice

What is "firm commitment" underwriting?

• A)Broker's guarantee of the price to the borrower.
• B)Broker sells as much of the debt issue as possible.
• C)Debt that is backed by specific collateral.
• D)Feature that permits the borrower to redeem before maturity.

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Definitions:

Net Present Value

Net Present Value (NPV) is a financial metric that calculates the present value of all future cash flows of an investment, minus the initial investment cost.

Analyzing

The process of examining data, documents, or systems in detail in order to understand them better and make informed decisions.

Discount Rate

The interest rate charged by central banks on loans to commercial banks or the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

IRR Cross-over

A concept where two projects have the same initial investment but differing cash flows leading to points at which their internal rates of return intersect.