In the world of finance, there exists a type of underwriting known as "firm commitment." In this arrangement, the brokerage firm takes on the role of principal and assumes the risk by using its own capital to purchase all of the securities being issued. This means that if the price of the securities decreases before the firm has a chance to resell them to its clients, the firm is responsible for any losses incurred. It is a high-stakes game that requires careful consideration and expertise.
