Professor Clifford W

question 65

Multiple Choice

Professor Clifford W.Smith, in evaluating issuance costs from underwritten issues, rights issues with standby underwriting, and a pure rights issues, found that 90% of the issues are underwritten, which was the most expensive method.This is done because:

• A)investment bankers know more than CFOs and they may buy the issue at an agreed upon price and disburse the funds sooner.
• B)investment bankers can increase the price received by increasing confidence in the issue, and they will buy the issue at an agreed upon price and disburse the cash sooner.
• C)investment bankers provide other services including price counseling, increasing public confidence, and providing funds to the issuer sooner.
• D)investment bankers know how to price the issue, and would not need to set as low as a price as the subscription price and provide price counseling.
• E)None of the above.

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Definitions:

Central Executive

The part of the brain's working memory system responsible for overseeing and regulating the flow of information from and to its various components.

Episodic Buffer

A component of the working memory system that integrates information from different sources into a single, multi-dimensional representation.

Visuospatial Sketchpad

A component of working memory responsible for holding and manipulating visual and spatial information.

Long-Term Memory

The stage of memory capable of storing information for prolonged periods, from hours to a lifetime, involving processes such as encoding, storing, and retrieval.