FINA 3317 - Chapter 16 | Questions with 100% Verified Answers
| Latest Update 2026/2027
Question: Diversified full-line securities firms engage in all but which one of the following?
Answer: Raising money via insured deposits
Question: A best efforts offering is one in which:
Answer: the investment banker acts only as a distribution agent.
Question: If an underwriter overestimates the demand for a firm's securities in a firm commitment offering, the
underwriter can:
A) sell the shares back to the issuing firm at a discount.
B) lower the bid price to the issuing firm.
C) increase the fees charged to the issuing firm.
D) cancel the issue and refund the fees paid by the issuing
firm.
E) None of these options are correct.
Answer: E) None of these options are correct.
Question: Investment firms that pool money from individuals and/or institutions and invest equity funds in
start-up firms are called:
Answer: venture capital firms.
Question: You buy euros in New York from Deutsche Bank and simultaneously sell them in London to Barclays
for a gain. This is an example of:
Answer: pure arbitrage.
Question: An unregistered issue sold to a few large institutional buyers is an example of a(n):
Answer: private placement.
Question: An investment banker agrees to a firm commitment offering of two million shares of Ace stock. The
offer price is set at $55 and the spread is 50 cents per share. If the stock is actually sold to the public at
$53.80, what is the investment banker's gain or loss?
Answer: $1,400,000 loss
Question: Day-to-day trading practices of securities firms currently may be regulated by which of the following?
I. FINRA II. SEC III. Federal Reserve IV. SIPC
Answer: I only
Question: Firms in the securities industry are required to maintain a net worth to assets minimum capital ratio
of ______________.
Answer: 2 percent.
Question: An investment banker agrees to a firm commitment offering of 1.2 million shares of Bally stock. The
offer price is set at $25.50 and the spread is 30 cents per share. If the stock is actually sold to the public at
$26.00, what is the amount of funds Bally receives? (Ignore any other fees or expenses.)
Answer: $30,240,000
, Question: The major result of the NSMIA was to:
Answer: reduce state regulatory powers over securities firms.
Question: An investment banker agrees to a best efforts offering of 2.5 million shares of Crew stock. The offer
price is set at $35 per share. If the stock is actually sold to the public at $34.50 and the banker charges a 3.45
cent commission per share sold, what is the amount of funds Crew receives? (Ignore any other fees or
expenses.)
Answer: $86,163,750
Question: _____________ are examples of investment bankers offering traditional commercial banking services.
Answer: Cash management accounts
Question: The trading activity involving purchases of large blocks of securities on the expectation of a
favorable price move over the next several weeks or months is called:
Answer: position trading.
Question: An entrepreneur looking for financing to get her small personally owned business up and running
should probably consider:
Answer: a venture capitalist.
Question: Which one of the following statements about venture capitalists is not correct?
Answer: Venture capitalists are passive investors
Question: In 2018, the greatest dollar volume of U.S. corporate underwriting occurred for which type of
security?
Answer: Straight corporate debt
Question: The _________________ insures losses of funds deposited with securities firms in the event of failure of
a securities firm.
Answer: SIPC
Question: In 2019, the top five underwriters engaged in about _____________ of global equity issues.
Answer: 38.5 percent
Question: Which one of the following securities firms' activities is normally the most risky?
Answer: Firm commitment offering
Question: The largest asset on the typical broker-dealers' balance sheet in 2016 was:
Answer: receivables from other broker-dealers.
Question: The largest liability of broker-dealers in 2016 was:
Answer: repurchase agreements.
| Latest Update 2026/2027
Question: Diversified full-line securities firms engage in all but which one of the following?
Answer: Raising money via insured deposits
Question: A best efforts offering is one in which:
Answer: the investment banker acts only as a distribution agent.
Question: If an underwriter overestimates the demand for a firm's securities in a firm commitment offering, the
underwriter can:
A) sell the shares back to the issuing firm at a discount.
B) lower the bid price to the issuing firm.
C) increase the fees charged to the issuing firm.
D) cancel the issue and refund the fees paid by the issuing
firm.
E) None of these options are correct.
Answer: E) None of these options are correct.
Question: Investment firms that pool money from individuals and/or institutions and invest equity funds in
start-up firms are called:
Answer: venture capital firms.
Question: You buy euros in New York from Deutsche Bank and simultaneously sell them in London to Barclays
for a gain. This is an example of:
Answer: pure arbitrage.
Question: An unregistered issue sold to a few large institutional buyers is an example of a(n):
Answer: private placement.
Question: An investment banker agrees to a firm commitment offering of two million shares of Ace stock. The
offer price is set at $55 and the spread is 50 cents per share. If the stock is actually sold to the public at
$53.80, what is the investment banker's gain or loss?
Answer: $1,400,000 loss
Question: Day-to-day trading practices of securities firms currently may be regulated by which of the following?
I. FINRA II. SEC III. Federal Reserve IV. SIPC
Answer: I only
Question: Firms in the securities industry are required to maintain a net worth to assets minimum capital ratio
of ______________.
Answer: 2 percent.
Question: An investment banker agrees to a firm commitment offering of 1.2 million shares of Bally stock. The
offer price is set at $25.50 and the spread is 30 cents per share. If the stock is actually sold to the public at
$26.00, what is the amount of funds Bally receives? (Ignore any other fees or expenses.)
Answer: $30,240,000
, Question: The major result of the NSMIA was to:
Answer: reduce state regulatory powers over securities firms.
Question: An investment banker agrees to a best efforts offering of 2.5 million shares of Crew stock. The offer
price is set at $35 per share. If the stock is actually sold to the public at $34.50 and the banker charges a 3.45
cent commission per share sold, what is the amount of funds Crew receives? (Ignore any other fees or
expenses.)
Answer: $86,163,750
Question: _____________ are examples of investment bankers offering traditional commercial banking services.
Answer: Cash management accounts
Question: The trading activity involving purchases of large blocks of securities on the expectation of a
favorable price move over the next several weeks or months is called:
Answer: position trading.
Question: An entrepreneur looking for financing to get her small personally owned business up and running
should probably consider:
Answer: a venture capitalist.
Question: Which one of the following statements about venture capitalists is not correct?
Answer: Venture capitalists are passive investors
Question: In 2018, the greatest dollar volume of U.S. corporate underwriting occurred for which type of
security?
Answer: Straight corporate debt
Question: The _________________ insures losses of funds deposited with securities firms in the event of failure of
a securities firm.
Answer: SIPC
Question: In 2019, the top five underwriters engaged in about _____________ of global equity issues.
Answer: 38.5 percent
Question: Which one of the following securities firms' activities is normally the most risky?
Answer: Firm commitment offering
Question: The largest asset on the typical broker-dealers' balance sheet in 2016 was:
Answer: receivables from other broker-dealers.
Question: The largest liability of broker-dealers in 2016 was:
Answer: repurchase agreements.
