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Series 7 > Issuing Securities > Flashcards

Issuing Securities Flashcards

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Series 7 Top-off Exam flashcards
1
Q

A company without business operations that raises money through an IPO in order to have its shares publicly traded for the sole purpose of seeking out a business or combination of businesses is known as:

A

a special purpose acquisition company (SPAC).

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2
Q

Which of the following are defined as securities?

A

II. Variable annuity units.

III. Investment company shares.

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3
Q

A member firm receives an order from an investment adviser to purchase shares in a common stock IPO. Regarding restricted persons, the member must:

A

obtain a representation from the conduit that the purchaser is not a restricted person.

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4
Q

To which of the following firms could a member grant concessions or other allowances?

A

I. Another member firm.

II. A foreign nonmember broker/dealer ineligible for FINRA membership.

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5
Q

Which of the following characteristics describes a final prospectus?

A

Complies with the full and fair disclosure requirements of the Securities Act of 1933.

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6
Q

All of the following regarding a tombstone advertisement for a new issue are true EXCEPT

A

They are used to offer the securities for sale

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7
Q

A corporate offering of 200,000 additional shares to existing stockholders may be made through a:

A

rights offering.

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8
Q

The maximum amount of securities that can be offered under Regulation A+ Tier 2 is:

A

$50 million in a 12-month period

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9
Q

A new client holds unregistered securities purchased offshore from a US issuer in an exempt Regulation S transaction. These securities

A

must be held 1 year before they can be resold in the United States

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10
Q

All of the following statements regarding corporate insiders are true EXCEPT

A

purchases may not be made through the exercise of options

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11
Q

Which of the following statements regarding a red herring is NOT true?

A

An agent may accept funds to be placed in escrow until the effective date if the request to do so is made by a potential purchaser.

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12
Q

Under the intrastate offering rule (Rule 147), when may a resident purchaser of securities resell them to a nonresident?

A

Nine months from the end of the distribution.

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13
Q

If an officer of a public company buys 400 shares of the company’s registered stock in the open market, he

A

may sell immediately subject to Rule 144 volume limitations

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14
Q

Regarding the purchase of new equity issues, restricted persons may:

A

not purchase shares of a new issue.

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15
Q

A due diligence meeting occurs between:

A

the issuing corporation and the underwriters to review and reexamine the full details of the pending underwriting and negotiate final terms to be included in the formal underwriting contract.

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16
Q

Which of the following acts requires corporate public issuers to send annual reports to their shareholders?

A

Securities Exchange Act of 1934.

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17
Q

Which of the following are TRUE regarding the two tiers of securities offerings under Regulation A+?

A

Both tiers are open to the public for investing

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18
Q

Regarding Regulation D (Private Placement) offerings, which of the following statements is TRUE?

A

Registration with the SEC is not required.

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19
Q

Under FINRA rules, if a member firm receives an order to buy a new equity issue on behalf of an undisclosed principal from a bank, the member must:

A

obtain a representation from the bank that the purchaser is not restricted.

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20
Q

All of the following are covered under the Securities and Exchange Act of 1934 EXCEPT:

A

trust indentures.

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21
Q

From the point of view of a corporate issuer, the most conservative means of raising capital would be the issuance of:

A

common stock.

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22
Q

The letter of intent in a corporate underwriting is typically signed by which of the following parties?

A

I. Issuer.

II. Managing underwriter.

23
Q

To be designated as an accredited investor under Regulation D, a married couple investing in a joint account must have income of at least:

A

$300,000.

24
Q

Under the Securities Act of 1933, the Securities and Exchange Commission has the authority to:

A

I. issue stop orders regarding a new issue registration filing.
II. review standard registration forms.

25
Q

Securities issued outside the United States by US issuers and sold to non-US residents

A

are considered to be offered in an exempt transaction

26
Q

All of the following are restricted persons EXCEPT:

A

any persons owning 5% or more of a member firm.

27
Q

A customer owns 1,000 shares of ABC corporation. Which of the following actions on the part of ABC would dilute her equity?

A

Registered primary offering of shares.

28
Q

All of the following must be part of a registration statement EXCEPT:

A

identification of investors who own 5% or more of the company.

29
Q

SEC Rule 145 requires a corporation to receive approval of its stockholders for certain events. This rule does NOT require shareholder approval for:

A

I. new shares issued because of a stock split.

II. shares issued for a stock dividend.

30
Q

The Securities Act of 1933 covers all of the following EXCEPT:

A

blue-sky laws.

31
Q

Which statements are TRUE regarding the purchase of new equity issues by restricted persons?

A

I. An investment club is permitted to buy a new equity issue at the POP.
II. An investment club that has a registered representative as a member is not permitted to buy a new equity issue at the POP.

32
Q

Which of the following securities is NOT exempt from the Securities Act of 1933?

A

Real estate investment trusts.

33
Q

Alpha Securities is the managing underwriter for a new issue of 1 million shares of ABC common on a firm-commitment basis. If part of the ABC issue remains unsold and results in a loss, the loss will be divided proportionately among the:

A

underwriting firms.

34
Q

Which of the following are TRUE of an over-allotment option or provision for a new issue?

A

I. It allows the underwriters to sell up to 15% more than the original number of shares offered.
II. It is a way for underwriters to address demand exceeding the number of shares originally offered.

35
Q

Stabilizing bids may be entered at

A

a price no higher than the public offering price.

36
Q

A shelf registration statement is good for two years, but once effective with the SEC, it allows shares to be sold over a maximum period of:

A

3 years.

37
Q

Underwriters that reserve the right to stabilize the price of securities distributed to the public under an SEC registration statement may do so:

A

only if notice is given in the prospectus.

38
Q

Before the filing of a registration statement for a new issue, an investment representative may NOT:

A

I. solicit indications of interest for the security.
II. solicit orders.
III. confirm the sale of the security to a customer.

39
Q

Under SEC Rule 134, a tombstone advertisement includes all of the following EXCEPT:

A

net proceeds to the issuer.

40
Q

A member firm broker/dealer wishing to go public may sell a new equity issue of its own securities to all of the following EXCEPT:

A

employees of other full-service member firms.

41
Q

Rule 144A regulates:

A

the sale of restricted stock to institutional investors.

42
Q

All of the following may occur during the mandatory 20-day cooling-off period EXCEPT:

A

soliciting transactions for the security.

43
Q

An investor files the necessary forms to sell stock under Rule 144. The filing is effective for a maximum of how many days?

A

90.

44
Q

An offering of securities in compliance with Rule 144A is sold primarily to:

A

qualified institutional buyers.

45
Q

Which of the following exemption provisions of the Act of 1933 may NOT be used for an initial offering of securities?

A

Rule 144.

46
Q

Which of the following are SROs?

A

I. FINRA.

II. Chicago Stock Exchange.

47
Q

Which of the following statements regarding a shelf offering are TRUE?

A

I. It can be used to distribute an additional offering only.

II. Its maximum duration is 3 years.

48
Q

A corporate insider may profitably sell the stock of his company, without penalty, after the stock has been held for more than:

A

6 months.

49
Q

An issuer may direct sales of a new issue to all of the following EXCEPT:

A

officers of the managing underwriter.

50
Q

If the customers of a selling-group member sell into a penalty stabilizing bid, the selling-group member must pay back to the underwriter the:

A

concession.

51
Q

XYZ Corporation is preparing a registration statement for a new issue consisting of 300,000 new shares and 200,000 existing shares held by officers. The offering price is $30 per share and the spread taken by the underwriters is $2 per share. After the offering is complete, XYZ will

A

8400000.

52
Q

Which of the following will NOT be found in a final prospectus?

A

Agreement among underwriters.

53
Q

Regarding the sale of a new issue, a customer becomes a restricted person if he is:

A

a salesperson who works for the issuing firm’s underwriter.

54
Q

When an investment banker is successful on a competitive bid corporate underwriting in which they agree to purchase the shares from the issuer, the underwriters will be handling the offering as:

A

a firm commitment.

Series 7 (15 decks)

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