How does the role of underwriting affect the issuing of securities?
What will be an ideal response?
Answer: The investment bankers who handle the issuing of securities either to the public or to private investors are financial intermediaries, and they must be compensated for the use of their scarce resources. This compensation includes a monetary fee, but it also often includes an underwriting discount, or spread. The underwriting discount between what the corporation receives from issuing the securities and what the public pays for the securities is often a large part of the compensation of the investment bank that underwrites the issue.
You might also like to view...
To determine the source of a company's noncurrent assets, on which financial statement will you look?
a. Income statement only b. Balance sheet only c. Both the balance sheet and the income statement d. Both the income statement and the statement of retained earnings
A convenience store's natural advantage over a supermarket is its low prices due to higher inventory turnover
Indicate whether the statement is true or false
Indicate the correct form of the adjective or adverb in parentheses. Use more or most, when appropriate, instead of less or least. Stella (carefully) managed her time
Which of the following statements best characterizes delivery reliability?
A) a company that always delivers on the same day of the week B) a company that always delivers at the promised time C) a company that delivers more frequently than its competitors D) a company that delivers faster than its competitors E) a company that has a computerized delivery scheduling system