Identify the procompetitive effect of banks' expansion of their securities activities.
A)Reduces the degree of underpricing of new issues.
B)Encourages stuffing of fiduciary accounts.
C)Increased provision of cheap loans on the implicit condition that this loan is used to purchase securities.
D)Use of lending powers by a bank to coerce a customer to buy the products sold by its securities affiliate.
E)Use of inside information by a bank to set the prices, or help the distribution of securities offerings by its affiliate.

Question

Quizplus · Accepted Answer

Banks' expansion of their securities activities can reduce the degree of underpricing of new issues as banks may have better information and distribution channels to accurately price new securities offerings. This can lead to more efficient allocation of capital and more accurate valuations for investors.

Identify the Procompetitive Effect of Banks' Expansion of Their Securities