Question 1

Which of the following is a core function of a "Merchant Banker"?

Management of Public Issues (IPOs) and corporate advisory.Accepting savings deposits from the public.Providing agricultural loans.Issuing currency notes.

View Explanation

Merchant Bankers mainly facilitate capital raising for companies by managing IPOs, underwriting shares, and providing consultancy on mergers and acquisitions.

Question 2

In the context of Merchant Banking, "Hard Underwriting" refers to an agreement where:

The underwriter agrees to buy the securities only after the offer closes and if there is a shortfall.The underwriter agrees to buy securities only from the promoters.The underwriter guarantees a fixed amount of subscription in advance, regardless of the market response.The underwriter only markets the issue without any financial commitment.

View Explanation

Hard Underwriting involves a firm commitment by the underwriter to subscribe to a certain number of shares even before the public issue opens, providing certainty to the issuer.

JAIIB Quiz

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