The investment banking process

1. When a firm needs to raise funds in the financial markets, it usually uses the services of an investment banker.

Last year Maverick Inc. entered into an agreement with Ginobli Partners, an investment bank. It has been a year since Maverick first registered its shares, but the firm still hasnt gone public. Maverick plans to go through with its security issuance in a couple of months. This is an example of:

A. A shelf registration

B. A prospectus

C. An underwriting syndicate

D. A registration statement

2. The cost incurred during the security issuing process is called the:

A. Underwriters spread

B. Offer price

C. Asked price

D. Flotation costs

E. Bid price

3. Because of the magnitude of the potential losses that may be incurred by an investment bank participating in the sale of a large underwritten security issue, it is customary for a group of banks to create an underwriting syndicate to reduce the risk exposure of each participating bank. The investment bank that organizes and leads the syndicate is called the (Selling group, participating dealer, OR managing underwriter).