Question
Why does an underwritten bond offering expose the investment bank to inventory risk?
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Answer
The underwriter guarantees sale of the full issue.
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Question
An underwriter only agrees to try selling bonds for a lesser-known issuer and earns a commission without guaranteeing sale. What issuance type is this?
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Answer
Best-efforts offering.
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Question
Why are bonds sold through a private placement typically less liquid afterward?
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Answer
They are sold to a select institutional group, not broadly offered.
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Question
Which is usually more liquid: an on-the-run developed-market sovereign bond or an off-the-run government bond?
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Answer
The on-the-run sovereign bond.
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