The managing investment banker is responsible for putting a syndicate together t
ID: 2648242 • Letter: T
Question
The managing investment banker is responsible for
putting a syndicate together to aid in the distribution and share the underwriting risk.
determining the value (price) of the company.
stabilizing the offering during the distribution period.
all of these are the responsibility of the investment banker.
A.putting a syndicate together to aid in the distribution and share the underwriting risk.
B.determining the value (price) of the company.
C.stabilizing the offering during the distribution period.
D.all of these are the responsibility of the investment banker.
Explanation / Answer
Answer is D - all of the above.
The managing investment banker sees to it that the IPO is a success. It takes underwriting risk i.e it will buy any unsold shares in the IPO. It helps in organizing IPO roadshows.
The investment banker helps the company in question in determining the price bands of the issue. An IPO states a price band, under which the shares can be bought. The price band states the lower and the upper limit price for buying the shares.Price is determined keeping in mind the company's financials and the current economic environment.
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