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series 7 take 2 > issuing securities > Flashcards

issuing securities Flashcards

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Series 7 Top-off Exam flashcards
1
Q

underwriter (broker dealer) is retained by _____ to:

A

retained by issuer

  • advise on raising capital
  • sell securities to public
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2
Q

what is the securities act of 1933?

A
  • final prospectus sent to customer

- all new issues required to registered with the SEC

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3
Q

describe process of registering an issue with the SEC

A
  1. issuer provides a full disclosure
  2. cooling off period
  3. effective date (release date)
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4
Q

minimum length of the cooling off period?

A

20 day minimum

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5
Q

what happens during the cooling off period?

A
  • deficiency letter
  • due diligence
  • indications of interest
  • preliminary prospectus (red herring)
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6
Q

what is the preliminary prospectus (red herring)?

A

new indications of interest on a new issue before issue is actually released to sell

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7
Q

what is not included in the preliminary prospectus?

A
  • no price

- no date

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8
Q

when is the price set on a new issue?

A

day before new shares are sold

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9
Q

what is the effective date and who sets it?

A
  • date shares can be sold

- SEC sets date

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10
Q

what is an IPO?

A

initial public offering

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11
Q

what is an APO?

A

additional public offering

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12
Q

what is the green shoe doctrine?

A

if there’s over demand for shares, you can add an additional 15% of shares without re-registering issues.

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13
Q

what is the shelf registration length for APOs?

A

3 years

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14
Q

describe a secondary offering

A

is a resale of treasury stock

-no prospectus required

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15
Q

what are the 2 types of underwriting commitments?

A
  • best efforts

- firm commitment

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16
Q

what are the 2 types of best offer commitments?

A
  • all or none

- mini/max

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17
Q

what components define the underwriting syndicate process?

A
  • syndicate is formed
  • selling group
  • underwriting spread
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18
Q

what is the syndicate letter?

A

outlines the syndicate formation and is an agreement among underwritiers

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19
Q

describe a selling group’s liability

A

selling groups have no liability for unsold securities but will make money on any shares sold.

20
Q

describe order of the underwriting syndicate

A
  • issuer
  • underwriting agreement
  • underwrites/syndicate
  • syndicate letter
  • selling group agreement
  • selling group
21
Q

define components of a corporate underwriting spread

A
  • management fee
  • underwriting fee
  • concession
22
Q

define components of a municipal underwriting spread

A
  • management fee

- total takedown (additional takedown + concession)

23
Q

managers of underwriting syndicates receive what amount in the spread?

A

receive full spread

24
Q

syndicates of underwritings receive what amount in the spread?

A

corp spread
-underwriting fee and concession
muni spread
-total takedown (additional takedown a+ concession)

25
Q

what will selling groups receive in the spread?

A

will receive concessions

26
Q

who assumes liability for unsold shares and who does not?

A
  • the syndicate has liability for unsold shares

- selling group does not have liability

27
Q

what determines price of IPOs?

A
  • similar company’s prices
  • current market conditions
  • indications of interest (red herrings)
28
Q

what determines price on APOs?

A

current price pinpoints what investors will pay

29
Q

what is included in the prospectus?

A
  • sec disclaimer
  • use of proceeds
  • financial statements
  • descriptions of business
  • info on officers and directors
30
Q

when is the prospectus delivered?

A

with or before delivery of final confirmation

31
Q

what are restricted people not allowed to buy?

A

IPOs of common stock at the public offering price (POP)

32
Q

who is exempt from the Securities Act of 1933?

A
  • securities issued by govt
  • securities maturing in 270 days or less
  • small offerings (5 mill or less maturing in 12 months)
  • intrastate offerings
  • private placements
33
Q

what do banker’s acceptances have to deal with?

A

import/exporting of foreign trades

34
Q

describe regulation A

A

small offerings

-offering of 5 mill or less maturing in less than 12 months

35
Q

describe regulation U

A

says that banks cannot lend money to customers in order to invest in stock market

36
Q

describe rule 147

A

offering is issued within on state

37
Q

describe registration of rule 147

A

needs to be registered at state-level

38
Q

describe issuer who qualifies for rule 147

A
  • main office in state where issue is sold

- 80% of assets and business in same state

39
Q

describe investors who qualify for rule 147

A
  • all are residences of state

- cannot resale to nonresidents for at least nine months

40
Q

describe regulation D

A

has to deal with private issued stock

ex. chick-fil-a

41
Q

describe an accredited individual investor in a reg D issue

A
  • 1 mill min net worth (not including house) OR

- $200,000 ($300,000 joint) annual income

42
Q

describe the limits on accredited and non accredited investors of a reg D issue

A
  • no limit on accredited investors

- no more than 35 non accredited investors

43
Q

describe rule 144

A

it has to do with the secondary resale of private placement stock

44
Q

cheat for rule 144

A
  • can sell greater of 1% of outstanding shares, or
  • average weekly volume of most recent four weeks
  • can sell only 4 times per year (have to wait 90 days between each trade)
45
Q

describe rule 144A

A
  • unregistered foreign securities
  • institutional customers only (QIB)
  • no six month holding period
46
Q

QIB stands for?

A

Qualified institutional buyer

series 7 take 2 (17 decks)

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