Question 1

Soft dollars is a term often used in reference to the portion of a fee or commission that is allocated to

Accepted Answer

A) research and other advisory services. 
B) custody and escrow services. 
C) clearance and settlement services. 
D) banking services. 
E) back office services. 
A) research and other advisory services. 
B) custody and escrow services. 
C) clearance and settlement services. 
D) banking services. 
E) back office services.

Question 2

The dominant form of institutional venture capital firms operate as

Accepted Answer

A) Corporation. 
B) Subsidiary of a financial company. 
C) Bank holding company. 
D) Limited partnership. 
E) General partnership. 
A) Corporation. 
B) Subsidiary of a financial company. 
C) Bank holding company. 
D) Limited partnership. 
E) General partnership.

Question 3

An investment banker agrees to underwrite an issue of 5 million shares of stock for NetChoice, Inc. on a best-efforts basis. The investment banker is able to sell 4.5 million shares for $31.00 per share and it charges NetChoice, Inc. $0.375 per share sold. What is the profit to the investment banker if all 5 million shares were sold for $35 per share?

Accepted Answer

A) Profit of $1,275,000. 
B) Loss of $1,875,000. 
C) Profit of $1,875,000. 
D) Loss of $3,125,000. 
E) Profit of $3,125,500. 
A) Profit of $1,275,000. 
B) Loss of $1,875,000. 
C) Profit of $1,875,000. 
D) Loss of $3,125,000. 
E) Profit of $3,125,500.

Question 4

The Canadian Investor Protection Fund (CIPF) protects investors against losses of up to $1,000,000 caused by the failure of a securities firm.

Accepted Answer

A) True 
 B)False

Question 5

The revision of the Bank Act and other regulatory changes have been the cause of the increase in interindustry mergers of investment banks and securities firms since 1987.

Accepted Answer

A) True 
 B)False

Question 6

An investment banker agrees to underwrite an issue of 5 million shares of stock for NetChoice, Inc. on a firm commitment basis. The investment banker pays $31.50 per share to NetChoice, Inc. for the 5 million shares of stock. It then sells those shares to the public for $30.00 per share. If the investment bank can sell the shares for $34 per share, how much money does NetChoice, Inc. receive?

Accepted Answer

A) $150,000,000. 
B) $157,500,000. 
C) $112,000,000. 
D) $125,000,000. 
E) $105,000,000. 
A) $150,000,000. 
B) $157,500,000. 
C) $112,000,000. 
D) $125,000,000. 
E) $105,000,000.

Question 7

An investment banker agrees to underwrite an issue of 10 million shares of stock for TWResearch, Inc. on a firm commitment basis. The investment banker pays $10.50 per share to TWResearch, Inc. for the 10 million shares of stock. It then sells those shares to the public for $11.20 per share. If the investment bank can sell the shares for $9.75 per share, what is the profit (loss) to the investment banker?

Accepted Answer

A) Profit of $1,000,000. 
B) Loss of $7,500,000. 
C) Profit of $7,000,000. 
D) Loss of $7,000,000. 
E) Loss of $1,000,000. 
A) Profit of $1,000,000. 
B) Loss of $7,500,000. 
C) Profit of $7,000,000. 
D) Loss of $7,000,000. 
E) Loss of $1,000,000.

Question 8

An investment banker agrees to underwrite an issue of 10 million shares of stock for Rochester Industries on a best-efforts basis. The investment banker is able to sell 8 million shares for $10.50 per share, and it charges Rochester Industries $0.225 per share sold. How much money does Rochester Industries receive?

Accepted Answer

A) $15,000,000. 
B) $84,000,000. 
C) $76,200,000. 
D) $82,200,000. 
E) $110,000,000. 
A) $15,000,000. 
B) $84,000,000. 
C) $76,200,000. 
D) $82,200,000. 
E) $110,000,000.

Question 9

An investment banker agrees to underwrite an issue of 5 million shares of stock for NetChoice, Inc. on a best-efforts basis. The investment banker is able to sell 4.5 million shares for $31.00 per share and it charges NetChoice, Inc. $0.375 per share sold. What is the profit to the investment banker it sells 4.5 million shares for $29 per share?

Accepted Answer

A) Profit of $1,687,500. 
B) Loss of $2,487,500. 
C) Profit of $1,875,000. 
D) Loss of $3,125,000. 
E) Profit of $3,125,500. 
A) Profit of $1,687,500. 
B) Loss of $2,487,500. 
C) Profit of $1,875,000. 
D) Loss of $3,125,000. 
E) Profit of $3,125,500.

Question 10

Securities trading and underwriting is a profit generating activity that requires FIs to hold an inventory of securities they trade.

Accepted Answer

A) True 
 B)False

Question 11

The largest source of funding for securities service firms and investment banks as an industry is repurchase agreements.

Accepted Answer

A) True 
 B)False

Soft dollars is a term often used in reference to the portion of a fee or commission that is allocated to

The dominant form of institutional venture capital firms operate as

The Canadian Investor Protection Fund (CIPF) protects investors against losses of up to $1,000,000 caused by the failure of a securities firm.

The revision of the Bank Act and other regulatory changes have been the cause of the increase in interindustry mergers of investment banks and securities firms since 1987.

Securities trading and underwriting is a profit generating activity that requires FIs to hold an inventory of securities they trade.

The largest source of funding for securities service firms and investment banks as an industry is repurchase agreements.

Why Are Financial Institutions Special

Deposit-Taking Institutions

Finance Companies

Mutual Funds, Hedge Funds, and Pension Funds

Insurance Companies

Risks of Financial Institutions

Interest Rate Risk I

Interest Rate Risk II

Credit Risk: Individual Loans

Credit Risk: Loan Portfolio and Concentration Risk

Liquidity Risk

Foreign Exchange Risk

Sovereign Risk

Market Risk

Off-Balance-Sheet Risk

Technology and Other Operational Risks

Liability and Liquidity Management

Deposit Insurance and Other Liability Guarantees

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization Index

Filters

Exam 4: Securities, Brokerage, and Investment Banking

Soft dollars is a term often used in reference to the portion of a fee or commission that is allocated to

The dominant form of institutional venture capital firms operate as

The Canadian Investor Protection Fund (CIPF) protects investors against losses of up to $1,000,000 caused by the failure of a securities firm.

The revision of the Bank Act and other regulatory changes have been the cause of the increase in interindustry mergers of investment banks and securities firms since 1987.

Securities trading and underwriting is a profit generating activity that requires FIs to hold an inventory of securities they trade.

The largest source of funding for securities service firms and investment banks as an industry is repurchase agreements.

Why Are Financial Institutions Special

Deposit-Taking Institutions

Finance Companies

Mutual Funds, Hedge Funds, and Pension Funds

Insurance Companies

Risks of Financial Institutions

Interest Rate Risk I

Interest Rate Risk II

Credit Risk: Individual Loans

Credit Risk: Loan Portfolio and Concentration Risk

Liquidity Risk

Foreign Exchange Risk

Sovereign Risk

Market Risk

Off-Balance-Sheet Risk

Technology and Other Operational Risks

Liability and Liquidity Management

Deposit Insurance and Other Liability Guarantees

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization Index

Filters