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standby underwriting

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Financial Dictionary

standby underwriting

An agreement by underwriters to purchase the portion of a new securities issue that remains after the public offering. Standby underwriting eliminates the issuer's risk of not selling the issue out, but it increases the investment bankers' risk.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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