FinancialMarketsChap14 - Finance Chapter 14 KEY POINTS p....

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Finance Chapter 14 KEY POINTS p. 265 1) There are three functions performed by investment bankers in the offering of new securities – advising, buying the securities from the issuer, and distributing the issue to the public 2) Depending on the type of underwriting agreement, the underwriting function may expose the investment banking firm to the risk of selling the securities to the public at a price less than the price paid by the issuer 3) The gross spread earned by the underwriter depends on numerous factors 4) Because of the risks associated with the underwriting of securities, an underwriting syndicate and a selling group are typically formed p. 266 1) The two groups that underwrite securities are investment banking firms and commercial banks. The limitations on commercial bank underwriting activities have been significantly reduced by the GLB act. 2) There are 4 firms that dominate investment banking in Japan – Nomura, Daiwa, Yamaichi, and Nikko p. 268 1) The SEC regulates underwriting activities 2) An issuer must file a registration statement, one part of which is the prospectus 3) The underwriter must exercise due diligence to assure that there are no misstatements or omissions of fact in the registration statement or prospectus 4) SEC Rule 415 (the shelf registration rule) gives greater flexibility to certain issuers by permitting them to file a single registration document for the offering of certain securities at one or more times within the next two years p. 272 1) There are variations in the traditional underwriting process
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FinancialMarketsChap14 - Finance Chapter 14 KEY POINTS p....

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