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Underwrite

[UN-der-write]

What is the definition of Underwrite?

To assume the risk of buying a new issue of securities from the issuing corporation or government entity and reselling them to the public, either directly or through dealers.

Using Underwrite in an Example

A financial institution underwrites a new issue of municipal bonds by purchasing all the bonds from the municipality and then reselling them to investors. This process helps the municipality raise funds for public projects while the institution earns revenue through the resale of bonds.

Using Underwrite in a sentence

The bank decided to underwrite the new bond issue to facilitate the expansion plans of the corporation.

Related Terms

The Uniform Accountancy Act (UAA) is a regulatory framework developed jointly by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA). It aims to enhance interstate reciprocity, facilitate cross-state practice by CPAs, meet the evolving needs of the accounting profession, respond to market demands, and protect the public interest.

The portion of the bond discount that has not yet been amortized. This discount represents the difference between the face value of a bond and the lower price at which it was issued or sold by the company, which has not yet been expensed in the profit and loss statement over the bond's life.

In the context of municipal bonds, underlying debt refers to the debt obligations of smaller government entities within the jurisdiction of a larger government entity, where the larger entity bears partial credit responsibility.

The specific security that must be delivered or received when a derivative contract, such as an option or futures contract, is exercised or settled.

A term used to describe securities or assets that are selling below their perceived intrinsic value, often assessed through fundamental analysis or by comparing the current market price to measures such as liquidation value.

An account on the books of a lending institution that represents interest deducted in advance from a loan, which is recognized as income progressively over the life of the loan.

Payments received for services which have not yet been performed or income received before the corresponding service or work is provided.

Interest that has been collected on a loan by a financial institution but cannot yet be recognized as earnings because the principal of the loan has not been outstanding for a sufficient period.

A regulatory framework for the public accounting profession developed jointly by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA). It aims to enhance interstate reciprocity, facilitate cross-state practice by CPAs, meet the evolving needs of the profession, and protect the public interest.

A set of IRS regulations that require the capitalization of both direct costs and an allocable portion of indirect costs related to producing, acquiring, and holding property. These costs must be included in inventory and are not deductible as current expenses but are recovered through depreciation or amortization.

Shares of a corporation's stock that have been authorized in its charter but have not yet been issued to shareholders.

A legal obligation where all business owners are personally responsible for all debts of the business, without any limit on the amount for which they are liable.

An audit opinion that is not qualified for any material scope restrictions or departures from Generally Accepted Accounting Principles (GAAP). It is issued when the auditor finds no material weaknesses and there have been no restrictions on the scope of the auditor's work, indicating that the financial statements present a true and fair view of the financial position and performance of the entity.

Unrealized losses or gains on long-term investments refer to increases or decreases in the value of investments that have not yet been sold. These are reflected in the balance sheet and affect the company's net worth but do not impact the cash flow until the investments are actually sold.

A financial gain or loss that exists on paper, resulting from an investment that has not yet been sold or settled. The profit or loss remains unrealized until the asset is actually disposed of.

Resources of a not-for-profit entity that have no restrictions as to use or purpose, allowing the organization flexibility in applying these funds to fulfill its mission.

A bond issued based solely on the issuer's creditworthiness without specific collateral backing, relying on the general credit of the company.