Underwriting New Securities Issuance Requires That the Investment Bank

question 37

Multiple Choice

Underwriting new securities issuance requires that the investment bank

• A)buys the issue at a certain price and then sells it in the primary market.
• B)provides research and legal advice only to the issuing company.
• C)buys the issue at a certain price and then sells it in the secondary market.
• D)provides its best effort to sell the securities,the unsold portion goes back to the issuer.
• E)purchases securities in the secondary market when they are undervalued.

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Definitions:

Accounts Payables

Short-term liabilities of a company, representing amounts owed to suppliers or creditors for goods and services received but not yet paid for.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period.

GAAP

Generally Accepted Accounting Principles, a common set of accounting rules and standards used in the United States for financial reporting.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) that are becoming the global standard for the preparation of public company financial statements.