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Bonds 105: The Process of Issuing Bonds

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1.
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.
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.
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.
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 _______.
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An insurance company. Investment bankers may sell newly issued bonds through private placements to institutional investors like insurance companies.