Explain the terms “private placement” and “public offering”? What is the difference between “best efforts” and “firm commitment” for public offering
A private placement is a new issue of securities that is sold to a small number of large institution investors. A public offering is a new issue of securities that is offered to the general public. In a best—effects deal, the investment bank does as well it can to place securities with investors, but does not guarantee that they can be sold. In a firm commitment, the investment bank agrees to buy the securities from the issuing company for a particular price and attempts to sell them in the market for a higher price.