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Bonds 105: The Process of Issuing Bonds

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1.
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.
2.
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.
3.
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.
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.
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.