💼intro to business review

Underwriting

Written by the Fiveable Content Team • Last updated September 2025
Written by the Fiveable Content Team • Last updated September 2025

Definition

Underwriting in the context of securities markets involves financial institutions assessing the risk and determining the price of issuing and selling new shares or bonds. It is a critical process that ensures a company can raise capital through stock offerings or debt issuance by guaranteeing a certain amount of money will be raised, even if the securities cannot be sold to investors at the desired price.