Finance Ch.15

The entire area of investment banking is becoming more competitive. True
An investment banker acts as a middleman between a corporation needing funds and investors with funds. True
Smaller investment banking houses may handle distributions for relatively unknown corporations on a “best-efforts” basis. True
The underwriting spread is the guaranteed minimum profit to an investment bank for each share distributed. False
The out-of-pocket cost to issue new common stock is always paid by the investment banker. False
While manipulation of security prices is normally illegal, the SEC allows underwriters to temporarily support the price of stocks that they have brought to market. True
Shelf registration has nearly eliminated competition in the investment banking industry. False
When a company first goes public, a registration statement must be filed with the New York Stock Exchange. False
Private placement eliminates the expensive and lengthy registration process with the Securities and Exchange Commission. True
Because of their lower levels of risk to the underwriter, and smaller issuances have lower spread percentages than large issuances. False

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