Overview

firm commitment


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1 An undertaking by a bank to lend up to a maximum sum over a period at a specified rate; a commitment fee usually has to be paid by the borrower, which is not returned if the loan is not taken up.

2 In the USA, an agreement in which an underwriter of a flotation assumes the risk that not all the securities issued will be sold, by guaranteeing to buy all the excess securities at the offer price.

3 A binding commitment to enter into an agreement.

Subjects: Financial Institutions and Services.


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