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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.
Choose wisely. There is only one correct answer.
False. A primary role of investment bankers is to help a corporation issue securities.
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.
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.
4.
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.
5.
When investment bankers underwrite bonds, they assume the risks of buying and reselling the new securities.
Choose wisely. There is only one correct answer.
True. They assume the risks involved in marketing the new securities.