Which of the following is not a reasonable argument for the increase in the number of banks that can compete in security underwriting activities?
A)Small firms gain increased access to the capital markets.
B)Lower commission and fee expense for firms issuing securities.
C)Issuing firms realize an increase in the degree of underpricing of new issues.
D)The market for securities underwriting will see a decline in market concentration.

Question

Quizplus · Accepted Answer

Issuing firms realizing an increase in the degree of underpricing of new issues is not a reasonable argument for the increase in the number of banks that can compete in security underwriting activities, as it implies a negative impact on the issuing firms. The other three options suggest positive outcomes for both firms and investors, which could attract more banks to compete in security underwriting activities.

Which of the Following Is Not a Reasonable Argument for the Increase