Which of the following does NOT correctly describe competitive sales?

Competitive sales refer to a method used primarily in the issuance of bonds, where multiple underwriters are invited to submit bids to underwrite a specific bond offering. This process ensures that the issuer can secure favorable pricing and terms by encouraging competition among underwriters.

The correct choice highlights that competitive sales do not involve direct negotiation between the underwriters and the issuer. Instead of negotiating terms, underwriters submit their bids, and the issuer selects the winning bid based on the submitted prices and other criteria. In this format, the emphasis is on an auction-like process, where the issuer awards the bond issue to the underwriter who offers the best terms, typically the lowest interest rate or greatest premium.

In contrast, the other options correctly characterize aspects of competitive sales. Underwriters indeed submit bids to compete for the underwriting rights, these sales methods are commonly employed in bond offerings, and while the issuer has the freedom to choose the best offer, it typically does not mean that all underwriters must accept the highest bid necessarily. Rather, the issuer evaluates all bids and selects based on various factors, reinforcing the auction format of the process. Thus, the negotiation is not a central feature of competitive sales, making the choice reflecting this fact the correct one.