FISD Financial Information Associate (FIA) Module 1 Practice Test

Which of the following describes the primary role of an investment bank?

Provides savings accounts and mortgages to individuals. Helps entities raise financial capital by acting as intermediary between issuer and investor. Accepts deposits and makes business loans for companies. Issues insurance policies to customers.

Correct Answer:

Helps entities raise financial capital by acting as intermediary between issuer and investor.

Explanation:

Investment banks primarily raise capital for clients by acting as intermediaries between issuers and investors. They underwrite new securities, help structure and price offerings like IPOs and follow-on financings, and distribute these securities to the market, while also providing advisory services on corporate finance, mergers and acquisitions, and capital strategy. This role focuses on connecting those who need funding with those who have money to invest, rather than accepting deposits or issuing insurance. So the description that emphasizes assisting entities in raising financial capital by bridging issuers and investors is the best fit.

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