An arrangement whereby a security issue is canceled if the underwriter is unable
to re-sell the entire issue.
The underwriter of securities commits to selling as many securities as possible and returns all unsold shares or units to the issuer.
An undewriting in which an investment banking firm commits to buy the entire issue and assumes all financial responsibility for any unsold shares.
Difference between the underwriters’s buying price and the offering price. The spread is a fee for the service of the underwriting syndicate.