SECTION L 50 Points (2 POINTS EACH) 1. The investment banker may advise clients on a continuing basis about A. B. C. D. The types of securities being sold The number of shares for distribution The timing of the sale All of the above options are correct When investment bankers act in the function of underwriters, the A. 2. Give a firm commitment to purchase the securities from the corporation at a set price B. Guarantee that the company will not suffer a decline in earnings after taxes C. Are allowed to sell as many securities as possible and return the rest unsold D. Are allowed to give advice to the company's management 3. In issuing stock, the term "spread" refers to he profit the managing investment banker gets for an issue of stock The disparity between the initial asking price and the average price for the stock issued some months later The difference between what the corporation gets for new issues of stock and what the public pays for the stock The total cost to the corporation for issuing new stock B. C. D. Dilution of earnings occurs because A. 4. A new issue of common stock creates more shares outstanding, which often reduces earnings per share temporarily B. The company suffers a decline in earnings after taxes C. The investment banker collects an underwriting fee D. All of the above options are correct