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Bonds 105: The Process of Issuing Bonds

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1.
The Securities and Exchange Commission requires bond issuers to register all newly issued bonds.
Choose wisely. There is only one correct answer.
False. Bonds sold through private placement do not need to be registered with the SEC.
2.
An underwriter for newly issued bonds profits through _______.
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An underwriting spread. The underwriter earns a profit, based on the difference between its purchase price and the selling price.
3.
Today, investment bankers primarily sell newly issued bonds through online brokerage services.
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False. Investment bankers sell bonds through a variety of means, including brokerage houses, ads in the financial press, and investor networks.
4.
Investment bankers generally work with an organization only when it issues bonds or stocks.
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False. Investment bankers often work with a corporation or government unit before and after the securities are issued.
5.
An investment banker firm has just sold a newly issued bond through private placement. The purchaser of the bond was most likely _______.
Choose wisely. There is only one correct answer.
An insurance company. Investment bankers may sell newly issued bonds through private placements to institutional investors like insurance companies.