Question 1

The regulation of securities markets​

Accepted Answer

A)   ​discourages investing by requiring the registration of investors
B)   ​is enforced by the Federal Reserve
C)   ​protects investors from their own mistakes
D)   ​provides investors with information to make informed decisions

Question 2

The SEC establishes a price for a new issue of securities.​

Accepted Answer

A) True 
 B)False

Question 3

Firms whose securities are already publicly held may file a shelf registration for possible future sales of stocks and bonds.​

Accepted Answer

A) True 
 B)False

Question 4

If a stock is initially offered to the public for $20 in an underwriting but the price immediately falls to $15,​
1)  the firm received $20 a share
2)  the initial investors sustain a loss
3)  demand exceeded supply
4)  supply exceeded demand

Accepted Answer

A)  ​1, 2, and 3
B)  ​1, 2, and 4
C)  ​2 and 3
D)  ​2 and 4

Question 5

​Venture capitalists

Accepted Answer

A)   ​buy existing securities
B)   ​are a source of funds for large firms
C)   ​buy securities issued by small, emerging firms
D)   ​register the securities they purchase with the SEC

Question 6

A prospectus gives estimates of a firm's prospective earnings for five years.​

Accepted Answer

A) True 
 B)False

Question 7

A major function of the New York Stock Exchange is to raise money for firms.​

Accepted Answer

A) True 
 B)False  False

Question 8

​An investment banker is not a financial intermediary because

Accepted Answer

A)   ​it does not transfer money from investors to firms
B)   ​it does not create claims on itself
C)   ​it does facilitate the transfer of funds
D)   ​it creates claims on itself

Question 9

The risk associated with an underwriting rests with the investment bankers.​

Accepted Answer

A) True 
 B)False

Question 10

​An investment banker
1)  often underwrites new issues of securities
2)  may be a division within a brokerage firm
3)  facilitates the sale of new securities

Accepted Answer

A)  ​1 and 2
B)  ​1 and 3
C)  ​2 and 3
D)  ​all three

Question 11

The Securities Investor Protection Corporation protects individuals from​

Accepted Answer

A)   ​fraud by corporations
B)   ​making poor investment decisions
C)   ​other investors who fail to make delivery
D)   ​brokerage firm failures

Question 12

In a best efforts agreement to sell new securities, the firm issuing the securities agrees to make the best effort to sell the securities.​

Accepted Answer

A) True 
 B)False  False

Question 13

The Securities and Exchange Commission regulates​

Accepted Answer

A)   ​trading in publicly held securities
B)   ​trading in privately held securities
C)   ​the margin requirement
D)   ​the amount a stock's price may change

Question 14

An investment banker specializes in corporate loans.

Accepted Answer

A) True 
 B)False

Question 15

In an underwriting the managing house forms the syndicate.

Accepted Answer

A) True 
 B)False

Question 16

If an investment banker makes a best efforts agreement to sell 1,200,000 shares at $10 a share, the investment banker must sell at least 200,000 shares.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not part of the underwriting process?​

Accepted Answer

A)   ​the prospectus
B)   ​the Federal Reserve
C)   ​the Securities and Exchange Commission
D)   ​the syndicate B

Question 18

If the initial offer price is too low,​
1)  supply will exceed demand
2)  demand will exceed supply
3)  the price of the security will rise
4)  the price of the security will decline

Accepted Answer

A)  ​1 and 3
B)  ​1 and 4
C)  ​2 and 3
D)  ​2 and 4

Question 19

An investment banker​
1)  is usually not a banker
2)  is frequently a division of a brokerage firm
3)  serves as a middleman between financial intermediaries and firms issuing new securities

Accepted Answer

A)  ​1 and 2
B)  ​1 and 3
C)  ​2 and 3
D)  ​only 3

Question 20

A firm that guarantees the proceeds from the sale of a new issue of securities is the​

Accepted Answer

A)   ​brokerage firm
B)   ​syndicate
C)   ​underwriter
D)   ​insurance company

Exam 3: Investment Banking

The regulation of securities markets​

Correct AnswerverifiedShow Answer

The SEC establishes a price for a new issue of securities.​

Correct AnswerverifiedShow Answer

Firms whose securities are already publicly held may file a shelf registration for possible future sales of stocks and bonds.​

Correct AnswerverifiedShow Answer

If a stock is initially offered to the public for $20 in an underwriting but the price immediately falls to $15,​ 1) the firm received $20 a share 2) the initial investors sustain a loss 3) demand exceeded supply 4) supply exceeded demand

Correct AnswerverifiedShow Answer

​Venture capitalists

Correct AnswerverifiedShow Answer

A prospectus gives estimates of a firm's prospective earnings for five years.​

Correct AnswerverifiedShow Answer

A major function of the New York Stock Exchange is to raise money for firms.​

Correct AnswerverifiedFalse

​An investment banker is not a financial intermediary because

Correct AnswerverifiedShow Answer

The risk associated with an underwriting rests with the investment bankers.​

Correct AnswerverifiedShow Answer

​An investment banker 1) often underwrites new issues of securities 2) may be a division within a brokerage firm 3) facilitates the sale of new securities

Correct AnswerverifiedShow Answer

The Securities Investor Protection Corporation protects individuals from​

Correct AnswerverifiedShow Answer

In a best efforts agreement to sell new securities, the firm issuing the securities agrees to make the best effort to sell the securities.​

Correct AnswerverifiedFalse

The Securities and Exchange Commission regulates​

Correct AnswerverifiedShow Answer

An investment banker specializes in corporate loans.

Correct AnswerverifiedShow Answer

In an underwriting the managing house forms the syndicate.

Correct AnswerverifiedShow Answer

If an investment banker makes a best efforts agreement to sell 1,200,000 shares at $10 a share, the investment banker must sell at least 200,000 shares.

Correct AnswerverifiedShow Answer

Which of the following is not part of the underwriting process?​

Correct AnswerverifiedB

If the initial offer price is too low,​ 1) supply will exceed demand 2) demand will exceed supply 3) the price of the security will rise 4) the price of the security will decline

Correct AnswerverifiedShow Answer

An investment banker​ 1) is usually not a banker 2) is frequently a division of a brokerage firm 3) serves as a middleman between financial intermediaries and firms issuing new securities

Correct AnswerverifiedShow Answer

A firm that guarantees the proceeds from the sale of a new issue of securities is the​

Correct AnswerverifiedShow Answer

The regulation of securities markets

Correct Answer
verified

The SEC establishes a price for a new issue of securities.

Correct Answer
verified

Firms whose securities are already publicly held may file a shelf registration for possible future sales of stocks and bonds.

Correct Answer
verified

If a stock is initially offered to the public for $20 in an underwriting but the price immediately falls to $15, 1) the firm received $20 a share 2) the initial investors sustain a loss 3) demand exceeded supply 4) supply exceeded demand

Correct Answer
verified

Venture capitalists

Correct Answer
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A prospectus gives estimates of a firm's prospective earnings for five years.

Correct Answer
verified

A major function of the New York Stock Exchange is to raise money for firms.

Correct Answer
verified
False

An investment banker is not a financial intermediary because

Correct Answer
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The risk associated with an underwriting rests with the investment bankers.

Correct Answer
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An investment banker 1) often underwrites new issues of securities 2) may be a division within a brokerage firm 3) facilitates the sale of new securities

Correct Answer
verified

The Securities Investor Protection Corporation protects individuals from

Correct Answer
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In a best efforts agreement to sell new securities, the firm issuing the securities agrees to make the best effort to sell the securities.

Correct Answer
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False

The Securities and Exchange Commission regulates

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Which of the following is not part of the underwriting process?

Correct Answer
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B

If the initial offer price is too low, 1) supply will exceed demand 2) demand will exceed supply 3) the price of the security will rise 4) the price of the security will decline

Correct Answer
verified

An investment banker 1) is usually not a banker 2) is frequently a division of a brokerage firm 3) serves as a middleman between financial intermediaries and firms issuing new securities

Correct Answer
verified

A firm that guarantees the proceeds from the sale of a new issue of securities is the

Correct Answer
verified