InvestorWords.com

underwriting

Definitions (3)

1. The procedure by which an underwriter brings a new security issue to the investing public in an offering. In such a case, the underwriter will guarantee a certain price for a certain number of securities to the party that is issuing the security (in exchange for a fee). Thus, the issuer is secure that they will raise a certain minimum from the issue, while the underwriter bears the risk of the issue.

2. The process of insuring someone or something.

3. The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.