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Bonds 105: The Process of Issuing Bonds

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1.
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.
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.
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.
When helping a corporation or government unit issue bonds, an investment banker may undertake all of the following except _______.
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Guaranteeing bond sales to the public. This is not usually part of the deal.
5.
Investment bankers serve as an intermediary between the organization issuing securities and the investors who purchase them.
Choose wisely. There is only one correct answer.
True. Investment bankers link a corporation or government unit to the capital marketplace.