How do you think each of the following items would affect a company's ability to attract new capital and the flotation costs involved in doing so?
a. A decision of a privately held company to go public
b. The increasing institutionalization of the "buy side' of the stock and bonds market
c. The trend toward financial conglomerates as opposed to stand alone investment banking houses
d. Elimination of the preemptive tight
e. The introduction in 1981 of shelf registration of securities
18-5 Before entering a formal agreement, investment banks carefully investigate the companies whose securities they underwrite; this is especially true of the issues of firms going public for the first time. Because the banks do not themselves plan to hold the securities but intend to sell them to others as soon as possible, why are they so concerned about making careful investigations?