ing ▁se cur ities ▁( both ▁equ ity ▁and ▁deb t ▁capital ). ▁The ▁services ▁of ▁an ▁under writer ▁are ▁typically ▁used ▁as ▁part ▁of ▁a ▁public ▁offering ▁in ▁a ▁primary ▁market . ▁ ▁This ▁is ▁a ▁way ▁of ▁distrib uting ▁a ▁newly ▁issued ▁security , ▁such ▁as ▁stock s ▁or ▁b onds , ▁to ▁invest ors . ▁A ▁synd icate ▁of ▁banks ▁( the ▁lead ▁man agers ) ▁under writ es ▁the ▁transaction , ▁which ▁means ▁they ▁have ▁taken ▁on ▁the ▁risk ▁of ▁distrib uting ▁the ▁se cur ities . ▁Should ▁they ▁not ▁be ▁able ▁to ▁find ▁enough ▁invest ors , ▁they ▁will ▁have ▁to ▁hold ▁some ▁se cur ities ▁themselves . ▁Under writ ers ▁make ▁their ▁income ▁from ▁the ▁price ▁difference ▁( the ▁" under writing ▁spread ") ▁between ▁the ▁price ▁they ▁pay ▁the ▁iss uer ▁and ▁what ▁they ▁collect ▁from ▁invest ors ▁or ▁from ▁bro ker - de al ers ▁who ▁buy ▁port ions ▁of ▁the ▁offering . ▁ ▁R isk , ▁exclus ivity , ▁and ▁reward ▁Once ▁the ▁under writing ▁agreement ▁is ▁struck , ▁the ▁under writer ▁be ars ▁the ▁risk ▁of ▁being ▁unable ▁to ▁sell ▁the ▁underlying ▁se cur ities , ▁and ▁the ▁cost ▁of ▁holding ▁them ▁on ▁its ▁books ▁until ▁such ▁time ▁in ▁the ▁future ▁that ▁they ▁may ▁be ▁favor ably ▁sold . ▁ ▁If ▁the ▁instrument ▁is ▁des irable , ▁the ▁under writer ▁and ▁the ▁se cur ities ▁iss uer ▁may ▁choose ▁to ▁enter ▁into ▁an ▁exclus ivity ▁agreement . ▁In ▁exchange ▁for ▁a ▁higher ▁price