You're here:  Home --> Dictionary --> U --> Underwriting

IPO
Quiet Period
Investment Banks
Going Public

Underwriting
Term category: General Business
In 10 words or less: The process in which investment bankers raise capital for companies.

Definition: Underwriting is the term used to describe the process by which investment bankers raise capital (debt and equity) for companies.

StockJargon Advice: When someone asks "who underwrote that security?", they're asking which investment bank's deal was it.  The term got its name because an investment bank assumes responsibility for a deal when it takes it on.  The investment bank then writes its name under the deal (get it?  Under writes) to show it is bearing the risk.

In exchange for underwriting deals, investment banks often take fees ranging from 3-10%.

Related Articles

Underwriting
This article explains the process by which companies' stocks are sold to the public…

Analyzing Analyst Recommendations
The SEC has put together this page to help investors understand analyst's recommendations, as well as their motivations.

Why Companies Go Public
This page explains why companies go public...

Related Books

100 Years of Wall Street by Charles Geisst
Lessons from the Legends of Wall Street by Nikki Ross
Reminiscences of a Stock Operator by Edwin Lefevre
Morningstar Guide to Mutual Funds by Christine Benz

# -A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z