What are the risks and reward for investment banks involved in underwriting a new security issue?
What will be an ideal response?
The investment bank earnings result from the spread, which is the difference between the price guaranteed to the firm and the price that it sells the issue in financial markets or directly to investors. The risk is that it may not be able to profitably resell the security.
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Which of the following is not included in GDP?
A) Unpaid maintenance of your house by your spouse. B) Services such as those provided by lawyers and dentists. C) The estimated rental (imputed) value of owner-occupied housing. D) Production by foreign citizens in the U.S.
When a new firm enters a competitive price-searcher market, the demand curves faced by all existing firms in that market will
a. shift to the left. b. shift to the right. c. shift in a direction that is unpredictable without further information. d. remain unchanged. It is the supply curve that will shift.
Suppose that the "Millennial" generation values leisure more than past generations. We can expect a decrease in the labor supply as the Millennials enter their prime working ages and a corresponding decrease in wages
a. True b. False Indicate whether the statement is true or false