Underwriter

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DEFINITION of 'Underwriter'

A company or other entity that administers the public issuance and distribution of securities from a corporation or other issuing body. An underwriter works closely with the issuing body to determine the offering price of the securities, buys them from the issuer and sells them to investors via the underwriter's distribution network.

BREAKING DOWN 'Underwriter'

Underwriters generally receive underwriting fees from their issuing clients, but they also usually earn profits when selling the underwritten shares to investors. However, underwriters assume the responsibility of distributing a securities issue to the public. If they can't sell all of the securities at the specified offering price, they may be forced to sell the securities for less than they paid for them, or retain the securities themselves.

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RELATED FAQS
  1. What is the underwriter's job in a real estate transaction?

    In a real estate transaction, the underwriter conducts research to ensure that the individual borrowing funds for the real ... Read Full Answer >>
  2. How do I become an underwriter?

    To become an insurance underwriter, you typically need a bachelor's degree. However, some employers may hire you as an underwriter ... Read Full Answer >>
  3. What is real estate underwriting?

    When an individual or business entity seeks funding for a real estate project or purchase, the loan request is scrutinized ... Read Full Answer >>
  4. Who are the key players in the bond market?

    The bond market can essentially be broken down into three main groups: issuers, underwriters and purchasers. The issuers ... Read Full Answer >>
  5. What does 'going public' mean?

    Going public refers to a private company's initial public offering (IPO), thus becoming a publicly traded and owned entity. ... Read Full Answer >>
  6. Do underwriters make guarantees to sell an entire IPO issue?

    Underwriters represent the group of representatives from an investment bank whose main responsibility is to complete the ... Read Full Answer >>

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