If Potential Revenues from Underwriting Greatly Exceed Brokerage Commissions,there Is

question 14

Multiple Choice

If potential revenues from underwriting greatly exceed brokerage commissions,there is ________ incentive for investment bank analysts to report ________ information about firms issuing securities.

• A) stronger; unbiased
• B) stronger; favorable
• C) weaker; unbiased
• D) weaker; favorable

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Definitions:

Management Fees

These are fees paid to managers for their role in operating an investment fund, usually expressed as a percentage of assets under management.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Unbiased Forward Rate

An estimate of future spot interest rates implied by current interest rates, under the assumption that the forward rates are an unbiased predictor of future spot rates.

Future Spot Rate

The anticipated price of an asset at a future date in a spot transaction, which involves the immediate settlement of the transaction.