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Bonds 105: The Process of Issuing Bonds

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1.
A primary role of investment bankers is to help a corporation invest its capital wisely.
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False. A primary role of investment bankers is to help a corporation issue securities.
2.
When investment bankers underwrite bonds, they assume the risks of buying and reselling the new securities.
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True. They assume the risks involved in marketing the new securities.
3.
Investment bankers serve as an intermediary between the organization issuing securities and the investors who purchase them.
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True. Investment bankers link a corporation or government unit to the capital marketplace.
4.
The Securities and Exchange Commission requires bond issuers to register all newly issued bonds.
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False. Bonds sold through private placement do not need to be registered with the SEC.
5.
An investment banker firm has just sold a newly issued bond through private placement. The purchaser of the bond was most likely _______.
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An insurance company. Investment bankers may sell newly issued bonds through private placements to institutional investors like insurance companies.