Underwriting Agreement

AAA

DEFINITION of 'Underwriting Agreement'

A contract between a group of investment bankers who form an underwriting group or syndicate, and the issuing corporation of a new securities issue. The underwriting agreement contains the details of the transaction, including the underwriting group's commitment to purchase the new securities issue, the price that the underwriting group will pay to the issuing corporation and the initial resale price.

INVESTOPEDIA EXPLAINS 'Underwriting Agreement'

The underwriting agreement can be considered the contract between a corporation issuing a new securities issue and the underwriting group that has agreed to purchase and then resell the issue for a profit. The purpose of the underwriting agreement is to ensure that all of the players understand their responsibility in the process, thus minimizing potential conflict.

RELATED TERMS
  1. Investment Bank - IB

    A financial intermediary that performs a variety of services. ...
  2. Investment Banker

    An individual who works in a financial institution that is in ...
  3. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  4. Syndicate

    A professional financial services group formed temporarily for ...
  5. Lead Underwriter

    A investment bank or other financial outfit that has the primary ...
  6. Lloyds Organizations

    An insurance syndicate that bases its organizational structure ...
Related Articles
  1. Insurance

    The Rise Of The Modern Investment Bank ...

  2. Professionals

    Top Things To Know For An Investment ...

  3. Professionals

    How To Make $1 Million In Finance

  4. Professionals

    Making It Big On Wall Street

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center