Which statement regarding the underwriting process and over-the-counter (OTC) markets is CORRECT?
A.
Corporations must have their shares listed both on an exchange and the OTC market during the underwriting process.
B.
During the underwriting process investment bankers raise investment capital from investors on behalf of corporations and governments issuing securities.
C.
Many new stock issues that are underwritten by securities firms are first listed on a stock exchange before they are sold over-the-counter.
D.
The disclosure standards for stock exchanges are not as stringent as those imposed by the OTC market.
Underwriting is the process through which an individual or institution takes on financial risk for a fee. This risk most typically involves loans, insurance, or investments. In the case of securities, underwriting involves conducting research and assessing the degree of risk each applicant or entity brings to the table before assuming that risk. During the underwriting process, investment bankers raise investment capital from investors on behalf of corporations and governments issuing securities. They also help determine the company’s underlying value compared to the risk of funding its IPO. References: Underwriting: Definition and How the Various Types Work - Investopedia, The future of insurance underwriting | Deloitte Insights
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