Paraphrase 1-4

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Nfuyrltra

Mathematics

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  1. Investment bankers have expertise in selling and distributing securities. They have sales networks and are constantly in touch with financial market place. Corporations on the other hand infrequently issue securities; bankers do it all the time. Bankers expertise can help the issuer design the right security, obtain wide distribution, and obtain a fair price for it.
  2. They originate or identify growing firms that can benefit from securities offerings. They can underwrite, or carry the risk, of a new offering by using their capital to purchase the securities from the issuer and then selling the securities to investors. For small, high risk issuers they may assist in a best effort offering by selling securities on a commission basis with no capital at risk.
  3. Investment bankers assume the risk of selling securities through their underwriting functions which guarantees the issuer a “firm price” for their new securities. If the stock price falls below this firm price, the investment bank takes the loss, not the corporation, per the banks’ underwriting agreement. Underwriters can execute market stabilization actions.
  4. The process in which an underwriting syndicate places orders to buy the security that it is attempting to sell to keep the demand for the issue, and therefore its price, at the desired level.

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