Misc.

Question 1

What is the term for preliminary prospectus?

Answer 1

Red Herring

Question 2

How many days must a prospectus be delivered for a exchange listed IPO?

For an non-listed registered secondary?

For a non-listed IPO?

Answer 2

Exchange listed IPO- 25 days

Non-listed registered secondary- 40 days

Non-listed IPO- 90 days

Question 3

What does WKSI stand for?

Answer 3

Well Known Seasoned Issuer

Question 4

What is defined as any document which is used in connection with an offering that’s not a statutory prospectus?

Answer 4

Free Writing Prospectus

Question 5

What type of business:

Limited liability for owners
 Unlimited number of shareholders
 Corporation is a taxable entity; shareholders are taxed again if cash dividends are paid out.
Qualifying dividends are taxed at a lower rate than ordinary income.
 Cannot pass through losses

Answer 5

C Corporation

Question 6

What type of business:
 Limited liability for owners
 No more than 100 shareholder (married couple is considered as one shareholder)
 Not a viable option for an IPO (first convert to a C Corporation)
 S Corporation is not a taxable entity; only shareholders are taxed
 S Corporation passes through income and losses

Answer 6

Subchapter S Corporation

Question 7

What type of business:
 Unlimited number of shareholders (many trade on exchanges)
 At least 75% is invested in real estate activities
 Must distribute at least 90% of income (if done, the REIT will not be taxed)
 Shareholders invest to receive dividends (taxed at the same rate as ordinary income)
 Can only pass through income, not losses

Answer 7

REIT

Question 8

What type of bankruptcy?
 Most are voluntary, with the filing done by the company
 Company and management continue to exist
 The filer is referred to as the debtor-in-possession (DIP)
 DIP files the plan or reorganization

Answer 8

Ch. 11 Reorganization

Question 9

What type of bankruptcy?
Trustee files the plan
 Company and management cease to exist
 Assets are sold off to pay creditors and other investors

Answer 9

Chapter 7 Liquidation

Question 10

T/F: Order of liquidation

 Secured creditors are paid first up to the value of the collateral, then unsecured as follows:
− Administrative claims
− Employee back wages
− Other unsecured debt (senior first, then subordinated debt)
 Preferred stockholders
 Common stockholders

Answer 10

True

Question 11

Are there SEC or FINRA recordkeeping requirements that apply to documents that are produced by issuers?

Answer 11

No

Question 12

Does market capitalization include restricted stock?

Answer 12

Yes

Question 13

Does public float included restricted stock?

Answer 13

No

Question 14

What is an SEC rule which provides an exemption from liability for certain parties in an offering of
securities if they’re able to prove that they had no knowledge of the fraud

Answer 14

Section 11 Defense

Question 15

In an auction for a company, a letter of intent (LOI) is binding or non-binding.

Answer 15

Non-binding

Question 16

In a two-step merger, there is a ____ followed by a _____.

A one-step merger requires _______

Answer 16

Two step: tender offer; short-form merger agreement

One-step: target shareholder vote