What type of sale involves selecting an underwriter through the lowest bid?

The type of sale that involves selecting an underwriter through the lowest bid is a competitive sale. In a competitive sale, issuers invite proposals from underwriters and then award the underwriting contract to the firm that offers the best terms, typically the lowest interest rate on the bonds. This process promotes transparency and ensures that the issuer receives the most favorable pricing, as multiple underwriters compete against each other.

In contrast, a negotiated sale involves the issuer directly negotiating the terms of the underwriting with a specific underwriter, which does not focus on selecting the lowest bid. Additionally, a direct sale means that the issuer sells the securities directly to investors without going through an underwriter, while a private placement refers to selling securities to a select group of investors, often avoiding public marketing. Each of these alternatives serves different purposes and contexts in public finance, but only a competitive sale emphasizes the selection of an underwriter based on the lowest bid.