Definition for : Underwriting fee

An underwriting fee is a fee paid by a company issuing Equity, bonds or raising bank Debt to banks which agree to underwrite part ot the funds. If banks are unable to sell or place the securities among Investors or other banks at the agreed price, they will be forced to buy thenselves the securities at the agreed price. The agreement may specify an equal amount among all participants or different amounts in proportion to the efforts of each bank.

(See Chapter 26 Value and corporate finance of the Vernimmen)

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