Chapter 12 Financing and Listing Securities KT

Question 1

Another name for a preliminary prospectus.

Answer 1

red herring prospectus

Question 2

A slang term used to indicate that a new issue has been cleared by a securities commission and may be distributed.

Answer 2

blue skyed

Question 3

In-house information circular for a firm’s sales representatives with the salient features of a new issue, both pro and con; used to solicit interest in the general public.

Answer 3

greensheet

Question 4

Bonds issued by a crown corporation but guaranteed by the applicable government as to interest and principal payments.

Answer 4

guaranteed bond

Question 5

Outstanding shares of a company which, while entitled to vote and receive dividends, may not be bought or sold unless special approval is obtained.

Answer 5

escrowed shares

Question 6

The purchase for resale of a security issue by one or more investment dealers or underwriters.

Answer 6

underwriting

Question 7

What action can an exchange take to allow significant news, such as a pending merger or substantial change in dividends, to be reported and widely disseminated fairly?

Answer 7

halt in trading

Question 8

A distribution method, often used by the Bank of Canada, where bids are requested from primary distributors and the higher bids are awarded the securities for distribution.

Answer 8

competitive tender

Question 9

A new issue of stocks or bonds bought from the issuer by an investment dealer for resale to its clients, usually by way of a private placement or short form prospectus.

Answer 9

bought deal

Question 10

A method of distribution for marketable bonds with primary distributors being allowed to request bonds at the average price of the accepted competitive tenders.

Answer 10

non-competitive tender

Question 11

What type of prospectus contains information by reference to material filed by the corporation in the Annual Information Form?

Answer 11

short form prospectus

Question 12

A new issue of securities offered to the public for investment for the very first time.

Answer 12

initial public offering

Question 13

An activity used to stabilize the aftermarket price of a recently issued security; also referred to as a greenshoe option.

Answer 13

over-allotment option

Question 14

The period of time between the issuance of a receipt for a preliminary prospectus and receipt for a final prospectus from the securities administrators.

Answer 14

waiting period

Question 15

Company allowed to seek financing by IPO before having assets or commercial operations.

Answer 15

Capital Pool Company

Question 16

The total dollar value of a company based on the current market price of its issued shares that are currently outstanding.

Answer 16

market capitalization

Question 17

A group of investment dealers who together underwrite and distribute a new issue of securities or a large block of an outstanding issue.

Answer 17

syndicate

Question 18

The underwriting of a security and its sale to a few buyers, usually institutional, in large amounts.

Answer 18

private placement