1. True or false: Loans to startups without sufficient outside resources for collateral are the exception for commercial banks. This type of lending is usually left to the SBA.

2. Houston Investments (HI), a Texasbased investment banking firm, has proposed two types of payment plans for the IPO being considered by Anderson Exploration. The first is a firm commitment of $20,000,000. The second is a best efforts arrangement in which Houston Investments will receive $3.00 for every share sold up to a maximum of $1,200,000 for the 400,000 shares being offered. How much money will HI earn under the firm commitment method if it is able to sell only 85% of the offering at a price of $60.00 per share?

A.$800,000

B.$1,600,000

C.$400,000.

D.$1,200,000