Synopses & Reviews
Purchase of this book includes free trial access to www.million-books.com where you can read more than a million books for free. This is an OCR edition with typos. Excerpt from book: CHAPTER III Syndicates: Joint Accounts And Underwkitings When a corporation requires at one time an amount of financing too great for the banking house which has undertaken to supply the corporation's need for capital, or to which the corporation is applying, to supply alone, the banking house seeks cooperation. How great the amount must be for the banking house to seek aid depends, of course, on the particular house and its placing power; that is, its ability to distribute securities and lodge them in the hands of investing financial institutions or individuals. With a particular house the amount may also vary from time to time. It will depend on the other commitments of the house at the time, its opinion of the probable course of the market, and, in general, all the considerations which enter into a determination of the amount of risk it is willing to assume at a given moment. Such cooperation in the sale of securities takes the form of joint accounts and under- writings. Though these two business methods ? joint account and underwriting transactions ? differ in degree rather than in kind, they differ enough to make the two terms desirable. Joint accounts are more common than under writings. Though an underwriting may not follow a joint account, ordinarily a joint account precedes an underwriting. Sometimes an underwriting transaction is entered into without any joint-account transaction preceding it. A description of the two transactions will make the situation clearer than any amount of preliminary general statement. Let us assume that a banking house has committed itself to purchase, or learned that it can purchase, an issue of corporation bonds. The transaction is larger than at the moment it cares to undertake to handle entirely on its own account and it seek...
Synopsis
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