4-16 In order for an investment bank to perform a firm commitment offering of securities,they must maintain at least 20% equity on their balance sheet.

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Quizplus · Accepted Answer

The statement is false. Investment banks are required to maintain a minimum equity-to-assets ratio of at least 5% under federal regulations, but there is no specific requirement of 20% equity for firm commitment offerings of securities.

4-16 in Order for an Investment Bank to Perform a Firm