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1 FINANCE MCQS

In a best efforts offering, the investment bank, in return for providing services, must ____________?

  • Not receive a fee
  • Receive a fee
  • Receive interest rate
  • Receive market rate of return
Correct Answer: B. Receive a fee

Detailed Explanation

In a best efforts offering, the investment bank acts as an agent rather than taking ownership of the securities. It uses its best efforts to sell the securities but does not guarantee a price or sale amount. For this service, the investment bank receives a fee or commission from the issuer as compensation.

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