1. PIPEs (Private investment in public equity) involve the issuance of equity securities to selected accredit investors by companies that have publicly traded shares. In a typical PIPE process, shares are sometimes marketed by placement agents using best efforts. What is the key difference between best efforts underwriting and firm commitment underwriting? (4 points)

1. Best efforts underwriting is always used in private placement, while firm commitment underwriting is used only in public placement
2. Agents do not work as a syndicate in best efforts underwriting, but they do form a syndicate in a firm commitment underwriting
3. In a best efforts underwriting, agents do not have the obligations to buy the shares from the issuers, but they do in a firm commitment underwriting
4. In the firm commitment underwriting, the syndicate buys the shares, while in best efforts underwriting, only the leading agent buys the shares