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Question

What is meant by "Underwriting", the term frequently used in financial sector?

A
Undervaluation of the assets
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B
The act of taking on a risk for a fee
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C
Giving a guarantee that a loan will not become a bad loan
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D
The act of permission to float an IPO
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Solution

The correct option is B The act of taking on a risk for a fee
Undertaking refers to the act of taking on a risk for a fee. It is mainly provided by some large financial institutions. For example: Undertaking services are provided by banks, insurance companies, etc.

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