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Bonds 105: The Process of Issuing Bonds

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1.
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.
2.
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.
3.
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.
4.
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.
5.
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.