Chapter 20, Problem 4CQ

Summary Introduction

To explain: The reason for underpricing being not a great concern with the offering of bonds.

Bond:

Bond refers to the securities, which are traded in public to raise the capital when needed. It is an investment with a fixed income, where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Underpricing:

The term underpricing refers to the offering of the stocks or the bond at a low price than before. The stocks or the debt are said to be underpriced when they are traded at a lower price than on which it was issued first for trade.