Series 79 practice questioneasySyndicate and Selling Groups
Why do issuers use a syndicate instead of one bank in larger offerings?
- ASEC rules prohibit a single underwriter above a fixed size
- BOne bank cannot be named in a prospectus
- CA syndicate broadens distribution, shares risk, and adds investor relationships✓ Correct answer
- DOnly syndicates can prepare research reports
Explanation
Why C — A syndicate broadens distribution, shares risk, and adds investor relationships
A syndicate broadens distribution, shares risk, and adds investor relationships Multiple banks expand coverage and underwriting capacity, which can improve execution and reduce risk concentration. This is especially helpful in large IPOs or complex financings.
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