In Relation to a Bond Issue,the Role of the Underwriter

question 118

Multiple Choice

In relation to a bond issue,the role of the underwriter is to:

• A)Guarantee payment to bondholders of both the periodic interest payments and the maturity value.
• B)Purchase the entire bond issue from the issuing corporation and then sell the bonds to the public.
• C)Represent the interests of the bondholders and,if necessary,to take legal action on their behalf.
• D)Maintain a subsidiary ledger of individual bondholders and mail out the periodic interest checks.

---

Definitions:

Future Value

The value of an investment or cash flow at a specific future date, considering compound interest.

Dirty Price

The price of a bond including accrued interest, also known as the full or invoice price. This is the price the buyer actually pays.

Clean Price

The price of a bond excluding any accrued interest; the price that is typically quoted in the bond market.

Quoted Price

The last price at which a security or commodity was traded and is publicly available.