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Series 79 Chapter 2 > Ch 2 Deck 2 > Flashcards

Ch 2 Deck 2 Flashcards

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Series 79 Top-Off Exam flashcards
1
Q

Offering in which issuer solicits bids for the offer and chooses an underwriter

A

Competitive Offering

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2
Q

Competitive Offerings are more common for

A

Municipal offerings

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3
Q

In Competitive offerings, underwriters are chosen by

A

lowest net interest cost

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4
Q

Shelf registrations are often filed when

A

market conditions are not favorable for an initial public offering to occur

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5
Q

type of registration in which an issuer may carry out all the necessary registration procedures ahead of time then wait for favorable conditions

A

shelf registration

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6
Q

Rule 415(a) imposes a 3 year time limitation on shelf offerings of what types?

A
  1. Mortgage-backed debt offerings
  2. Continuous offerings lasting more than 30 days
  3. Offerings by S-3/F-3 issuers
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7
Q

Rule 415(a) imposes a 2 year time limit on shelf registrations of what type?

A

Business combinations

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8
Q

Who is eligible for an automatic shelf registration?

A

S-3 filers (by checking box on form)

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9
Q

Type of securities for which a shelf registration be used

A

both Debt and Equity

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10
Q

PIPE investors are allowed to trade in the stock after the close of the deal if

A

an 8-K has been filed after close

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11
Q

Shares sold in a PIPE transaction are typically sold at a

A

discount to market price

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12
Q

agreement by the underwriter to buy the shares of an offering at a discount and resell them to investors at a public offering price.

A

Firm Commitment

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13
Q

Underwriter is responsible for the marketing and sale of the securities in a

A

Firm Commitment agreement

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14
Q

Who assumes all risk of offering in Firm Commitment underwriting

A

Underwriter

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15
Q

underwriter does not guarantee all shares will be sold in a

A

Best efforts commitment

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16
Q

underwriter must sell a minimum number of shares or the offering is cancelled in a

A

Mini-max

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17
Q

In a Mini-max agreement after the minimum number of shares sold is met, the remaining shares are sold

A

on a best-efforts basis

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18
Q

either the underwriter sells all the shares or the offering is voided

A

All-or-none (AON)

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19
Q

Rule 15c2-4 requires payments to be escrowed for securities in an independent bank for what types of offerings?

A

“All or None” and “Mini-max”

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20
Q

Under Rule 15c2-4, escrowed payments for securities are sent to issuer if

A
  1. terms of offering are met

2. all the specified shares are sold within a specified time period

21
Q

Under Rule 15c2-4, if terms of the offering are not met, escrowed payments of securities

A

will be returned to the investors

22
Q

Under Rule 15c2-4, broker dealers must transmit

A

money promptly when making a trade

23
Q

underwriting type used to allow shareholders to retain proportional ownership in an issue of additional stock

A

standby underwriting (in conjunction with a rights offering)

24
Q

to allow proportional ownership, stock is offered to existing shareholders

A

at a discount before the follow on offering

25
Q

a firm commitment to buy up any shares that were not bought (in a rights offering designed to allow proportional ownership) in a firm commitment.

A

Standby underwriting

26
Q

Lead underwriter otherwise known as

A

managing underwriter
book runner
book manager

27
Q

opposite of firm commitment offering is

A

best efforts offering

28
Q

Two types of best efforts underwriting

A 
Mini Max (Part or none)
All or none
29
Q

Under 15c2-4 the escrow agent for best efforts offerings may invest in

A

bank accounts
bank money market accounts
short term CDs issued by the bank
short term securities issued by the US Government

30
Q

Under 15c2-4 the escrow agent for best efforts offerings may not invest in

A 
money market funds
Corporate equity or debt securities
Repurchase agreements
Banker acceptances
Commercial paper
Municipal securities
31
Q

Under 15c2-4 prompt delivery of payment from prospective purchasers to the escrow agent means

A

By noon of the next business day after receipt

32
Q

Under 15c2-4 escrow agent must be

A

a US commercial bank that is unaffiliated with either the issuer or the underwriter

33
Q

a rights offering occurs right before

A

a follow-on offering

34
Q

What is the risk of the selling group?

A

NO financial risk, only a benefit if they sell

35
Q

Public company raises funds by selling shares in a public offering

A

Private Investment in Public Equity

36
Q

PIPE stands for

A

Private Investment in Public Equity

37
Q

Because a PIPE is a private transaction it does not need to be registered

A

before the deal closes

38
Q

Most companies register PIPE’s after the deal closes so that

A

the investors are not subject to resale restrictions

39
Q

After a PIPE transaction closes, companies typically file

A

an 8-K form

40
Q

Filing an 8-K form after a PIPE transactions to disclose

A

any material non-public information that was revealed to the PIPE investors

41
Q

Revealing material non-public information that was revealed to the PIPE investors with an 8-K after the transaction allows

A

investors to not be precluded from trading in the stock after the close of the deal (because of insider trading restrictions)

42
Q

Prior to investing in a PIPE, many investors will require assurance that

A

an 8-K will be filed after the close of the deal

43
Q

What effect can a PIPE transaction have on earnings per share?

A

A dilutive effect

44
Q

Because of possible dilution, PIPE issuers are required by file a notification form by NASDAQ if the transaction resulted in

A

an increase of 5% or more of the shares outstanding

45
Q

If a PIPE issuer is required to file a notification form because the transaction resulted in an increase of 5% or more of the shares outstanding (dilution), they must file it within

A

10 days of the closing

46
Q

What is the limit on the number of shares that can be sold in a PIPE transaction?

A

There is no limit

47
Q

NASDAQ and the exchanges require that if a company sells more than 20% of its outstanding common stock in a PIPE transaction, the shares must be sold

A

at or above the fair market price unless the company obtains shareholder approval.

48
Q

If a company issuing a PIPE is not selling more than 20% of its outstanding common stock, the shares can be sold

A

at either above or below the market price

49
Q

Shares sold in a PIPE transaction are typically sold at a

A

discount to the market price

Series 79 Chapter 2 (21 decks)

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