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21. The Federal Reserve System has authority over what area of securities trading?

a.margin trading

b.insider trading

c.exchange market trading

d.registration of the issue

 

22.The major source of funds for brokers and dealers is

a.customer accounts balances.

b.call loans from commercial banks.

c.their net worth.

d.loans from the SEC.

 

23.Which of the following is not a service provided by full-service brokerage firms?

a.execution of trades

b.storage of securities

c.making a market in the customers' securities

d.margin credit to customers

e.investment advice

 

24.Investment bankers tend to reduce their risk of underwriting by

a.using futures contracts to hedge their price risk.

b.underpricing a new issue.

c.reducing the size of the selling group in the underwriting.

d.reducing the number of investment banking firms in the underwriting syndicate.

 

25.A(n) _________ is a “market-maker” in securities and trades on a bid/ask basis.

a.broker

b.arbitrager

c.dealer

d.investment banker

 

26. All but one of the following are merger-related services provided by investment bankers               to acquiring firms:

a.Investment advice to target companies.

b.Identify merger target companies for the acquirer.

c.Analysis and pricing of the deal.

d.Merger negotiation assistance.

 

27.In an underwritten IPO, investment banks in the underwriting syndicate can sell shares

a.to institutional investors such as mutual funds

b.to retail investors

c.back to the issuer

d.both a and b

 

28.Universal banks were/are:

a.commercial banks operating in the U.S. prior to 1980.

b.financial institutions outside of the U.S. that can engage in deposit taking, making loans, brokerage activities, securities underwriting, and offering               insurance services.

c.investment banks operating in the U.S. prior to 1980.

d.commercial banks that can also sell universal life insurance policies.

e.none of the above.

 

29.It is called an underwritten offer if

a.the risk of selling the issue at a price higher than that promised to the issuer is borne by the investment bank.

b.the difference between the price at which the issue is sold and that promised to the issuer represents the underwriting spread or the profit earned by the               investment bank.

c.the investment bank guarantees the issuing firm a certain price.

d.both a and b

e.all of the above

 

30.In an underwritten offer, the risk is borne by

a.an investment banker

b.an issuer

c.investors

d.a selling group

e.a dealer

 

 

 

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