Underwriting contract

• In the firm commitment contract the underwriter guarantees the sale of the issued stock at the agreed-upon price. For the issuer, it is the safest but the most expensive type of the contracts, since the underwriter takes the risk of sale.
• In the best efforts contract the underwriter agrees to sell as many shares as possible at the agreed-upon price.
• Under the all-or-none contract the underwriter agrees either to sell the entire offering or to cancel the deal.