16 Questions
What is securitization in the context of investment?
The process of borrowers directly entering capital markets
How has globalization impacted the investment environment?
Encouraged international investing in worldwide environments
What is financial engineering primarily focused on?
Designing hybrid securities with custom-tailored characteristics
How has the revolution in information and communication networks impacted the financial sector?
Led to the rise of Internet investment banking
What trading platform is an electronic order matching system connecting brokers to the PSE?
PSEtrade XTS
Which system does the government use to sell securities to primary dealers?
ADAPS
What type of securities are directly purchased through underwriters?
Commercial papers
Which entity launched a new trading system for the PDEx Fixed Income Market?
Philippine Dealing and Exchange Corp. (PDEx)
What is the purpose of allocating shares based on bids in the underwriting process?
To minimize underpricing of the shares.
What distinguishes securities exchanges from over-the-counter markets?
Securities exchanges only allow trading among members, while over-the-counter markets are open to everyone.
Why are IPOs marketed to investors at attractive prices?
To attract more institutional investors to the IPOs.
What adds value to brokerage firms in securities exchanges?
The possession of a large number of seats on the exchange.
What is one reason why discounts on IPOs may seem unfair to small investors?
Small investors receive less valuable information compared to institutional investors.
How have upstarts like Wit Capital and Hambrecht impacted the underwriting market?
They have caused concern about potential future disruptions to traditional practices.
How do underwriters (investment bankers) manage the risk associated with underwritten issues?
By bearing the price risk of underwritten issues and unmarketable securities.
Based on the text, why have IPOs been considered poor long-term investments?
Because IPOs typically underperform other firms of the same size in the long term.
Learn about the mechanism of how initial public offering (IPO) shares are priced and allocated to investors based on their bids. Explore how shares are distributed to the highest bidders and the concept of offer price in IPOs.
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