3. Floatation costs for debt vs. equity are less for all but one of the followin

ID: 1170055 • Letter: 3

Question

3. Floatation costs for debt vs. equity are less for all but one of the following reasons?

a. No risk for bond investors

b. Scheduled cash flow streams

c. Often issued for replacement of debt that is simply maturing

d. Less legal preparation and far less “road show” type of investment bank work

4. Which of the following Is not a major function of investment banking?

a. Proprietary Trading

b. Synthetic Securities, or Financial Engineering

c. Market Making

d. Managing large equity mutual funds

5. The risk of a loss related to closing out a transaction is referred to as _________ risk.

a. settlement

b. credit

c. interest rate

d. exchange rate

3) A(No risk for bond investors)

4)D(Managing large equity mutual funds)

5)A(settlement risk)

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