Who is responsible for purchasing new issues of securities and reselling them to investors?

The role of an underwriter is crucial in the process of purchasing new issues of securities and then reselling them to investors. When a company decides to raise capital by issuing new stocks or bonds, an underwriter steps in to manage this process. They typically assess the market, determine the price of the securities, and facilitate the sale of these securities to investors.

Underwriters work by purchasing the securities directly from the issuing company and then selling them to the public or institutional investors. This function not only ensures that the issuing company receives the necessary capital but also helps to establish a market for the newly issued securities. Their expertise and market knowledge allow them to effectively gauge demand and manage the risks involved in issuing new securities.

In contrast, brokers act as intermediaries who buy and sell securities on behalf of clients, while traders are involved in buying and selling securities on behalf of firms or their own accounts. Investors are the end consumers in this scenario, who purchase the securities from underwriters or brokers, thus playing a different role in the financial ecosystem.