Capital MarketsQuestion 312 of 398
How does a selling group member differ from a syndicate member in an underwriting?
a.A selling group member sets the offering price
b.A selling group member helps distribute shares but assumes no underwriting risk or financial liability for unsold shares
c.A selling group member always earns a larger spread than syndicate members
d.A selling group member must be a bank rather than a broker-dealer
Explanation
Selling group members assist in distributing the securities on an agency basis and earn a selling concession, but they take on no commitment to purchase or financial risk for unsold shares. Syndicate members, by contrast, commit capital and bear underwriting liability.
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