Diagnostic Exam Review Flashcards
Who assumes share price risks in a floating exchange ratio (target or acquirer)
The acquirer assumes all share price risk
Member firms must establish, based on adequate due diligence, that a recommendation to buy a given security or product is suitable for at least some investors. This requirement is known as
reasonable basis suitability
What is a cram down?
A plan forced on creditors by the court.
What type of underwriting is used in a rights agreement?
A standby underwriting
Assuming a fixed enterprise value, is equity increased or decreased in a dividend recap?
Decreased
Can mutual funds participate in private placements?
Yes
How do you gross up a restructuring charge
(1-Tc)
How are corporate bonds quoted?
In 1/8th increments
How are Treasuries quoted
1/32nd increments (ie. 99 10/32)
When an issuer repurchases stock for a price in excess of par value, what is the impact to capital surplus?
It is reduced by the acquisition costs of the acquired shares, less par value of the acquired shares.
When does FINRA permit a representative from borrowing money from a customer?
1.) firm has written supervisory procedures addressing this practice 2.) customer is an immediate family member, bank, or individual with whom the representative has a personal or business relationship outside of services performed as a registered rep.
When does Reg M not apply?
- trades made in separate accounts w/out coordination between them
- trade made for investment companies
- offerings not conducted on a firm basis
Who is responsible for Firm Element training?
Covered persons who deal with the public
Under Reg M, who is considered to be a distribution rep/
underwriters, dealers, and prospective underwriters
What items are B/D’s not required to maintain records of?
registration statements, prospectuses or preliminary prospectuses (red herrings)
What is FINRA Broker Check?
bankruptcy info, Form BD, Forms U4 and U5
What does FINRA Broker Check not include?
information about reps that haven’t been active in the business within the past two years
Which type of corporation is able to claim a dividends received deduction?
C-Corp
When is syndicate manager required to notify FINRA CFD if it expects the closing of the offering to be delayed?
No later than the actual closing date
What is a temporary group formed to distribute an offering?
The underwriting syndicate
