A public offering involves offering securities, usually shares, to the general public. In the case of a firm commitment public offering, an investment bank agrees to buy a specified amount of securities from the issuer and then attempts to sell them to the public, promising to own any securities which the public might not take up. Thus, the issuer is completely certain that they will raise the amount specified.

Option A is incorrect. A private placement refers to selling securities to a small group of chosen investors. In other words, the sale is closed to the general public.

Option B is incorrect. The word “best efforts” refers to the bank’s best efforts to sell the securities at the agreed-upon price. However, there are no assurances that the intended amount will actually be raised. The final amount may well fall short of the target.

Option D is incorrect. In a dutch auction, the price of the offering is set after taking into consideration all bids to determine the highest price at which the offering can be sold. In their bids, investors indicate the number of securities they are prepared to buy and the price they are willing to pay for each. Securities are allotted to investors in order of bid prices, where the highest bid is considered first, then the next highest, until all the securities have been allotted.