1. Explain how securities firms differ from investment banks. In what ways are they financial intermediaries? 3. What are the different types of firms in the securities industry and how does each type differ from the others? 5. What is the difference between an IPO and a secondary issue? 7. What are the risk implications to an investment bank from underwriting on a best-efforts basis versus a firm commitment basis? If you operated a company issuing stock for the first time, which type of underwriting would you prefer? Why? What factors might cause you to choose the alternative? 8. An investment bank agrees to underwrite an issue of 15 million shares of stock for Looney Landscaping Corp. If the investment bank underwrites the stock on a firm commitment basis, it agrees to pay $12.50 per share to Looney Landscaping Corp. for the 15 million shares of stock. It can then sell those shares to the public for $13.25 per share. How much money does Looney receive? What is the profit to the investment bank? If the investment bank can sell the shares for only $11.95, how much money does Looney receive? What is the profit to the investment bank? Suppose, instead, that the investment bank agrees to underwrite the 15 million shares on a best-efforts basis. The investment bank is able to sell 13.6 million shares for $12.50 per share, and it charges Looney Landscaping Corp. $0.275 per share sold. How much money does Looney receive? What is the profit to the investment bank? If the investment bank can sell the shares for only $11.95, how much money does Looney receive? What is the profit to the investment bank