What are the methods of underwriting, Finance Basics

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What are the Methods of Underwriting

An underwriting agreement may take any of the below three forms:

(i) Standing behind the issue: Under this method, underwriter guarantees the sale of a specified number of shares within a specified period. If public don't subscribe to the specified amount of issue, the underwriter buys the balance in issue.

(ii) Consortium Method: Underwriter is jointly done by a group of underwriters in this method. This method is adopted for large issue.

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