Question

Under the ______ method, the underwriter sells as many shares as possible but may or may not sell all of the new shares. multiple choice question.

Answer 1

Under the Best efforts method, the underwriter sells as many shares as possible but may or may not sell all of the new shares.

The best efforts method is used in the oil and gas industry to account for certain operating expenses sells as many shares as possible. Under the successful efforts method, a company only capitalizes those costs associated with the location of new oil and gas reserves when those reserves have been found.

The term best efforts refers to an agreement made by a service provider to do whatever it takes to fulfill the requirements of a contract. In finance, an underwriter makes a best efforts or good faith promise to the issuer to sell as much of their securities offering as possible. While the two parties come to an agreement for the sale of some securities, the underwriter doesn't guarantee to sell them all.

• Best efforts is a term for a commitment from an underwriter to make their best effort to sell as much as possible of a securities offering.
• It is also a general service agreement term used in place of a firm deliverable commitment.
• The opposite is a firm commitment or bought deal, in which the underwriter buys all shares or debt and has to sell it all to make money.

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