Question 1

Seed financing is the first stage of venture capital financing.

Accepted Answer

A) True 
 B)False

Question 2

Commercial lenders take fees for arranging mergers or security offerings and move to the next deal.

Accepted Answer

A) True 
 B)False

Question 3

An underwritten issue is the distribution of securities in a process in which the investment banker promises only to make its best sales effort.

Accepted Answer

A) True 
 B)False

Question 4

A private placement is:

Accepted Answer

A)  a method of issuing securities in which the issuer sells the securities directly to the ultimate investors.
B)  a method of issuing securities in which the issuer sells the securities to investment banks.
C)  a method of issuing securities in which the issuer sells the securities the ultimate shareholders.
D)  none of the above.

Question 5

During the origination of a new security issue,the investment banker can help the issuer:

Accepted Answer

A)  analyse the feasibility of the project and determine the amount of money to raise.
B)  decide on the type of financing needed.
C)  design the characteristics of securities to be issued.
D)  all of the above. D

Question 6

The best example of an effort to manage inventory risk is:

Accepted Answer

A)  the formation of a selling group.
B)  the formation of an underwriting syndicate.
C)  allotting shares of the issue to participating brokers.
D)  paying a high price to the issuing firm.

Question 7

The primary factors changing the relationship between commercial and investment banking were:

Accepted Answer

A)  the interaction between economic and technological forces and regulatory constraints.
B)  the interaction between commercial banks and regulatory constraints.
C)  the interaction between economic and central banks and regulatory constraints. 
D)   the interaction between economic and private investors and regulatory constraints.

Question 8

In an underwritten offer,the risk of selling the issue at a price lower than that promised to the issuer is borne by the investment bank.

Accepted Answer

A) True 
 B)False

Question 9

The relationship between investment and commercial banks is largely determined by the regulations of the specific country that they are operating in.

Accepted Answer

A) True 
 B)False

Question 10

Investment banks that operate as locally incorporated banks (ADIs)are regulated as though they were retail banks because they can accept retail deposits.

Accepted Answer

A) True 
 B)False

Question 11

A public-private partnership is:

Accepted Answer

A)  a contract between a public sector authority and a private party where the investment bank assumes substantial financial,technical and operational risk in the project.
B)  a contract between a public sector authority and a private party where the private party assumes substantial financial,technical and operational risk in the project.
C)  a contract between a public sector authority and a private party where the public sector assumes substantial financial,technical and operational risk in the project.
D)  a contract between a public sector authority and a private party where the commercial bank assumes substantial financial,technical and operational risk in the project.

Question 12

First-stage financing is:

Accepted Answer

A)  capital provided to a company at the idea stage.
B)  capital provided to initiate manufacturing and sales.
C)  capital used for initial expansion of a company that has already been producing and selling a product.
D)  capital provided for a company that expects to go public within a year or so.

Question 13

Venture capital recipients are often called business angels.

Accepted Answer

A) True 
 B)False

Question 14

What are venture capitalists and when do they provide venture capital financing?

Accepted Answer

Venture capital is another source of fun...

Question 15

A universal bank is an institution that can accept deposits,make loans,underwrite securities,engage in brokerage activities and sell and manufacture other financial services such as insurance.

Accepted Answer

A) True 
 B)False

Question 16

Equity financing provided to young businesses by investors who then play an active role in advising the management of the business is called:

Accepted Answer

A)  project finance.
B)  commercial loans.
C)  initial public offering.
D)  venture capital. D

Question 17

Because investment banks do not accept retail deposits,they can do as they please.

Accepted Answer

A) True 
 B)False

Question 18

A distinctive difference between commercial banks and an investment bank is the requirement to hold reserves against deposits and the mandatory capital requirements by commercial banks.

Accepted Answer

A) True 
 B)False

Question 19

A universal bank is:

Accepted Answer

A)  a retail bank with a commercial division.
B)  a global retail bank that has market presence in greater than 100 countries
C)  an institution that can accept deposits and make loans
D)  an institution that can accept deposits and make loans,underwrite securities,engage in brokerage activities,and sell and manufacture other financial services such as insurance.

Question 20

An investment bank specialises in corporate loans.

Accepted Answer

A) True 
 B)False  False

Exam 18: Investment Banking and Venture Capital

Seed financing is the first stage of venture capital financing.

Correct AnswerverifiedShow Answer

Commercial lenders take fees for arranging mergers or security offerings and move to the next deal.

Correct AnswerverifiedShow Answer

An underwritten issue is the distribution of securities in a process in which the investment banker promises only to make its best sales effort.

Correct AnswerverifiedShow Answer

A private placement is:

Correct AnswerverifiedShow Answer

During the origination of a new security issue,the investment banker can help the issuer:

Correct AnswerverifiedD

The best example of an effort to manage inventory risk is:

Correct AnswerverifiedShow Answer

The primary factors changing the relationship between commercial and investment banking were:

Correct AnswerverifiedShow Answer

In an underwritten offer,the risk of selling the issue at a price lower than that promised to the issuer is borne by the investment bank.

Correct AnswerverifiedShow Answer

The relationship between investment and commercial banks is largely determined by the regulations of the specific country that they are operating in.

Correct AnswerverifiedShow Answer

Investment banks that operate as locally incorporated banks (ADIs)are regulated as though they were retail banks because they can accept retail deposits.

Correct AnswerverifiedShow Answer

A public-private partnership is:

Correct AnswerverifiedShow Answer

First-stage financing is:

Correct AnswerverifiedShow Answer

Venture capital recipients are often called business angels.

Correct AnswerverifiedShow Answer

What are venture capitalists and when do they provide venture capital financing?

Correct AnswerverifiedVenture capital is another source of fun...View AnswerShow Answer

A universal bank is an institution that can accept deposits,make loans,underwrite securities,engage in brokerage activities and sell and manufacture other financial services such as insurance.

Correct AnswerverifiedShow Answer

Equity financing provided to young businesses by investors who then play an active role in advising the management of the business is called:

Correct AnswerverifiedD

Because investment banks do not accept retail deposits,they can do as they please.

Correct AnswerverifiedShow Answer

A distinctive difference between commercial banks and an investment bank is the requirement to hold reserves against deposits and the mandatory capital requirements by commercial banks.

Correct AnswerverifiedShow Answer

A universal bank is:

Correct AnswerverifiedShow Answer

An investment bank specialises in corporate loans.

Correct AnswerverifiedFalse

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D

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Venture capital is another source of fun...
View Answer

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D

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