Question 1

The trading activity involving purchases of large blocks of securities on the expectation of a favorable price move over the next several weeks or months is called

Accepted Answer

A)  program trading.
B)  pure arbitrage.
C)  day trading.
D)  position trading.
E)  hedging.F) All of the above
G) B) and E)

Question 2

_____________ are examples of investment bankers offering traditional commercial banking services.

Accepted Answer

A)  Online brokers
B)  Cash management accounts
C)  Underwriting corporate debt and equity offers
D)  Venture capital funds
E)  Mergers and acquisition servicesF) D) and E)
G) B) and C)

Question 3

Describe an agency transaction (brokerage)and a principal transaction (dealer)that is involved in trading. What determines profits in each activity?
 Which is riskier?

Accepted Answer

Market makers act as an agent by process...

Question 4

An investment banker agrees to a firm commitment offering of two million shares of Ace stock. The offer price is set at $55 and the spread is 50 cents per share. If the stock is actually sold to the public at $53.80,however,what is the investment banker's gain or loss?

Accepted Answer

A)  $1,400,000 gain
B)  $1,400,000 loss
C)  $500,000 gain
D)  $500,000 loss
E)  None of the optionsF) D) and E)
G) A) and B)

Question 5

A stock broker acts as a principal on behalf of the customer.

Accepted Answer

A) True 
 B)False

Question 6

What are soft dollar fees or commissions?
 How can these lead to conflicts of interest for investment bankers?

Accepted Answer

The term "soft dollar" can mean differen...

Question 7

If an underwriter overestimates the demand for a firm's securities in a firm commitment offering,the underwriter can

Accepted Answer

A)  sell the shares back to the issuing firm at a discount.
B)  lower the bid price to the issuing firm.
C)  increase the fees charged to the issuing firm.
D)  cancel the issue and refund the fees paid by the issuing firm.
E)  none of the optionsF) D) and E)
G) C) and E)

Question 8

Which one of the following statements about venture capitalists is not correct?

Accepted Answer

A)  Venture capitalists contribute to equity financing rather than make loans.
B)  Venture capitalists are passive investors.
C)  Most private venture capitalists are organized as limited partnerships.
D)  The federal government licenses some private firms to provide lower-cost funds to entrepreneurs.
E)  Angel venture capitalists are wealthy individuals who fund business start-ups.F) A) and E)
G) A) and B)

Question 9

A market maker buys IBM at $185 for his own account and sells the stock later in the day at $187. He is acting as a broker in this transaction.

Accepted Answer

A) True 
 B)False

Question 10

An investment banker agrees to a firm commitment offering of 1.2 million shares of Bally stock. The offer price is set at $25.50 and the spread is 30 cents per share. If the stock is actually sold to the public at $26.00,however,what is the amount of funds Bally receives? (Ignore any other fees or expenses.)

Accepted Answer

A)  $31,200,000
B)  $30,600,000
C)  $30,240,000
D)  $29,280,000
E)  $28,120,000F) C) and D)
G) A) and B)

Exam 16: Securities Firms and Investment Banks

What are soft dollar fees or commissions? How can these lead to conflicts of interest for investment bankers?

Correct Answer
verified
The term "soft dollar" can mean differen...
View Answer

An investment banker agrees to a firm commitment offering of two million shares of Ace stock. The offer price is set at $55 and the spread is 50 cents per share. If the stock is actually sold to the public at $53.80,however,what is the investment banker's gain or loss?

Correct Answer
verified

Correct Answer
verified

If an underwriter overestimates the demand for a firm's securities in a firm commitment offering,the underwriter can

Correct Answer
verified

Which one of the following statements about venture capitalists is not correct?

Correct Answer
verified

Describe an agency transaction (brokerage)and a principal transaction (dealer)that is involved in trading. What determines profits in each activity? Which is riskier?

Correct Answer
verified
Market makers act as an agent by process...
View Answer

A stock broker acts as a principal on behalf of the customer.

Correct Answer
verified

The trading activity involving purchases of large blocks of securities on the expectation of a favorable price move over the next several weeks or months is called

Correct Answer
verified

_____________ are examples of investment bankers offering traditional commercial banking services.

Correct Answer
verified

A market maker buys IBM at $185 for his own account and sells the stock later in the day at $187. He is acting as a broker in this transaction.

Correct Answer
verified

Exam 16: Securities Firms and Investment Banks

What are soft dollar fees or commissions? How can these lead to conflicts of interest for investment bankers?

Correct AnswerverifiedThe term "soft dollar" can mean differen...View AnswerShow Answer

An investment banker agrees to a firm commitment offering of two million shares of Ace stock. The offer price is set at $55 and the spread is 50 cents per share. If the stock is actually sold to the public at $53.80,however,what is the investment banker's gain or loss?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If an underwriter overestimates the demand for a firm's securities in a firm commitment offering,the underwriter can

Correct AnswerverifiedShow Answer

Which one of the following statements about venture capitalists is not correct?

Correct AnswerverifiedShow Answer

Describe an agency transaction (brokerage)and a principal transaction (dealer)that is involved in trading. What determines profits in each activity? Which is riskier?

Correct AnswerverifiedMarket makers act as an agent by process...View AnswerShow Answer

A stock broker acts as a principal on behalf of the customer.

Correct AnswerverifiedShow Answer

The trading activity involving purchases of large blocks of securities on the expectation of a favorable price move over the next several weeks or months is called

Correct AnswerverifiedShow Answer

_____________ are examples of investment bankers offering traditional commercial banking services.

Correct AnswerverifiedShow Answer

A market maker buys IBM at $185 for his own account and sells the stock later in the day at $187. He is acting as a broker in this transaction.

Correct AnswerverifiedShow Answer

Correct Answer
verified
The term "soft dollar" can mean differen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Market makers act as an agent by process...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified