| A financial institution which, in return for a fee or commission, acts as an intermediary between a company and investors and agrees to purchase unsold shares in a new issue, if the issue is not fully subscribed. From the companys point of view, having its new issue underwritten is a form of insurance. It means that if an issue is priced too high and the market shuns it, the company can still be sure that it will raise the funds expected from the new issue. Security comes at a price and underwriters charge a fee for the back-up they provide.
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