A broker-dealer who acted as financial advisor to a municipality in structuring a new issue now wishes to act as underwriter in a negotiated offering.

Which statement is TRUE?

A. This is only permitted in competitive bid underwritings

B. The financial advisor is prohibited from acting as the underwriter

C. The broker-dealer must disclose to the issuer in writing all compensation received from the issuer

D. The broker-dealer must inform the issuer in writing that a potential conflict of interest exists

B. The financial advisor is prohibited from acting as the underwriter

Explanation: The Municipal Securities Rulemaking Board prohibits a financial advisor that was involved in the issue of a municipal security to underwrite offerings. Acting in both capacities produces a conflict of interest. This rule applies to underwriting both competitive and negotiated bids.

The only time a broker can be an underwriter in such a case is when  he/she does not get any compensation for offering this service as an underwriter.

The true statement is B. The financial advisor is prohibited from acting as the underwriter

Explanation:

This because a financial advisor to a municipality is paid an advisory fee for assisting a municipality structure a new bond issue, with the aim of obtaining the lowest interest cost for the issuer. An underwriter for a new municipal issue wants to obtain the highest interest rates possible on the bonds, because it is easier to sell. Consequently, there is a conflict of interest between the financial advisor and the underwriter. Also, the Municipal Securities Rulemaking Board rule is that the financial advisor cannot be the underwriter.

oh my god you are going so many marks marks i don't want to give you answers sorry

the answer to this question would be shared investment