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    #1

    underwriting

    Would anyone please help me with the following in bold?

    Buffett invested $4 million in GEICO's devalued stock and persuaded an investment firm, Salomon Brothers, to raise capital for the company by underwriting an additional $75 million in stock.

    Is the above saying "guarantee the purchase of additional 75 million dollars' worth of stock?"

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    #2

    Re: underwriting

    Dear unpakwon:

    Quote Originally Posted by unpakwon View Post
    Would anyone please help me with the following in bold?

    Buffett invested $4 million in GEICO's devalued stock and persuaded an investment firm, Salomon Brothers, to raise capital for the company by underwriting an additional $75 million in stock.

    Is the above saying "guarantee the purchase of additional 75 million dollars' worth of stock?"
    From Dictionary.com:

    underwrite:
    to guarantee the sale of (a security issue to be offered to the public for subscription).

    Best wishes,

    Petra


    • Join Date: Oct 2006
    • Posts: 19,434
    #3

    Re: underwriting

    Essentially, yes. They are providing the financial support for the loan.


    • Join Date: Aug 2009
    • Posts: 34
    #4

    Re: underwriting

    Underwrite also means "Protect by insurance"

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