CFA Level I · CFA Level I Exam · Fixed-Income Issuance and Trading
In a syndicated underwriting of a new bond issue, the lead underwriter most likely:
The lead underwriter manages the offering, forms the syndicate of banks that share the underwriting, and works with the issuer to set the offering price. It neither guarantees later secondary-market prices nor serves as bondholders' trustee.
- Aguarantees the secondary-market price of the bonds
- Bmanages the offering, forms the syndicate and sets the pricing with the issuerCorrect
- Cacts as trustee for bondholders after issuance
Explanation
The lead (bookrunning) underwriter organizes the syndicate, builds the order book, and agrees the offering price with the issuer. It does not guarantee later trading prices. The trustee role is separate and represents bondholders under the indenture.
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