Missed PP Qs

Question 1

The spread is the difference between the price paid to the issuer by the underwriter and the public offering price. If the issue were receives $9 per share and the public offering price is $10 per share, how much is the spread?

Answer 1

1$

Question 2

Initial public offerings are made ____ initially. Once the offering is complete, the shares are generally listed on ______

Answer 2

OTC initially - not on exchanges until offering is complete

Question 3

Prospectuses cannot be used for more than _____ months without revision and cannot contain information older than_____ months

Answer 3

9 months and 16 months

Question 4

A listed company has asked a broker dealer to buy its own shares in the market under a treasury stock repurchase plan. Inside market in the stock is $15.00-15.25. The last reported sale of the stock occur at $15.10- at what price can the stock be purchased?

Answer 4

$15.10 or lower because the last reported sale is 15.10 and this is the higher than the current independent bid of $15. The stock can be purchased at 15.10 or lower.

Question 5

A broker dealer that is a member of a syndicate may purchase the securities in the market for its own account during the underwriting period ______

Answer 5

Under no circumstances

They can buy it when the syndicate is disbanded

Question 6

A “_____” is a firm that finds a company that wishes to go public and introduces that firm to an underwriter

Answer 6

Finder

Question 7

Finders are deemed to be industry “insiders” and cannot be compensated with _______

Answer 7

IPOs of common stock

Question 8

A web front can be used to make an online offer of a private placement under reg D only if ____

Answer 8

Access to the site is password protected

Thats bc they need to be prequalified that ensures they are accredited - this is not a self- accreditation because the SEC does not allow this- the BD must perform due diligence to make sure they are verified

Question 9

An issuer has filed an S-1 registration statement for an IPO. During the cooling off period the underwriters have found unexpectedly high investor demand for the issue. The issuer would be required to file an amended S-1 for the offering if the size was increased by ____

Answer 9

20%

(Basically more than the 15% for the green shoe clause)

Question 10

The basic rule is that there is a_____% limit on underwriting fees or anything similar or related

Answer 10

10%

Question 11

There is a____% limit on offering expenses that are reimbursed from the proceeds of the offering

Answer 11

5%

Question 12

The maximum amount that can be raised under Regulation crowdfunding is:

Answer 12

$5 million

Question 13

The maker of a takeover offer must be concerned with which regulations?

Answer 13

SEC rule 145, SEC regulation MA and Hart Scott Rodino act

Question 14

_________ is designed to improve corporate auditor independence, speed up corporate reporting of significant events and reports of trades, to minimize conflicts of interest between a broker dealers research departments and corporate issuers, and between a broker dealers research department and it’s investing department

Answer 14

Sarbanes Oxley

Question 15

If a new issue is “hot” an issuer may NOT direct sales of that issue to:

Answer 15

Finders, member firms, fiduciaries and institutional portfolio managers who wish to buy personally

Finders are basically security industry insiders, which makes them prohibited

Question 16

A financial advisor wants to sell an IPO to a retail customer. IPOs can be offered to customers who:

Answer 16

Only be offered to customers who in the past 12 months have signed a representation that they are not restricted from buying IPOs

Does verification must be retained for three years by the member firm

Question 17

An underwriter participation in an eastern account underwriting is completed when:

Answer 17

The managing underwriter terminates the syndicate

Question 18

An ISSUER can direct shares of a “new” issue to everyone except _____ of the UNDERWRITER

Answer 18

Employees

Question 19

The FINRA corporate financing rule allows an issue of securities that are “hot” to direct sales of that issue to a:

Answer 19

Divisional President of the issuer

Sale of the issuer shares to FINRA members, their employees, finders and fiduciary are all prohibited under the FINRA IPO rule- the only exception here is if it is the IPO of a privately held FINRA member firm that is taking itself – in this case, the officer is an employees of the firm can buy the shares

Question 20

Under rule 144, a member holding a sell order for “144” shares may solicit:

Answer 20

The issuer for purchase of its outstanding on registered securities

It makes no sense for a member holding a sell order to contact another individual who wishes to sell – he wants to find someone to buy the stock

Question 21

Which business form does NOT permit flow through of gain and loss to owners?

Answer 21

Mutual funds regulated under subchapter M

Question 22

An underwriter is offering common stock of ABC corporation in a primary distribution. ABC is a newly formed company that has never had registered shares outstanding. A dealer who subsequently sells ABC stock in the secondary market, must furnish a prospectus to any purchaser for:

Answer 22

90 days following the effective date

Question 23

Under SEC rules, a customer is considered to be ______ only to the extent of his _______ position in a security. It makes no difference that the positions are split among different accounts at the brokerage firm.

Answer 23

Long ; net long

Question 24

The SEC defines a graphic communication as a written communication. The SEC list of graphic communications includes any form of electronic media, including videotapes, audio, tapes and facsimile, CD ROM, electronic mail, Internet, websites, and computer networks. ; these are also called:

Answer 24

Free writing prospectuses

Question 25

If a member firm changes it designated principle responsible for overseeing the firms, AML program, what needs to happen?

Answer 25

FINRA must be notified promptly via the FINRA Contact system no later than 30 days

Question 26

FINRA dues are assessed on:

Answer 26

Based on an annual membership fee, an annual fee per branch office, an annual fee per registered individual, and a percentage of all over the counter transaction income of the member and income from exchange trades

Question 27

A registered representative who has been called for active duty, can share commissions during the period of military service with another representative at the same firm if:

Answer 27

They handle that representatives customers, and they have to be at the same broker dealer

Question 28

If a broker dealer finds that information filed in its Form BD is inaccurate or incomplete for any reason, it must amend the filing_______

Answer 28

Promptly

Question 29

If it registered person terminates association with a broker dealer, firm, and reassociate after two years of termination, that person is subject to the regulatory element of continued education on a cycle based on_______

Answer 29

Based on reassociation a.k.a. the most recent registration date

Question 30

SIPC logo is required to appear on ________ written communications by a BD

Answer 30

Advertisements

Question 31

Under FINRA rules, repurchase agreements between members or members and their customers are ______ only if the securities that are the subject of the agreement are exempt

Answer 31

Permitted

Exempt securities include government, muni’s, agency

Question 32

Under the investment company active 1940, distributions must be distributed_____

Answer 32

Annually

Question 33

Once mutual fund physicians have been held for 30 days, the SEC permits them to be sold on margin at ____% loan value

Answer 33

50%

Question 34

Investment advisors must register with the ______

Answer 34

SEC

Question 35

Under the FINRA conduct rules, the maximum sales charge that can be imposed on a single purchase of a variable annuity is________

Answer 35

An amount that’s fair and reasonable

Question 36

Closed end funds are _______ from redeeming their shares

Answer 36

Prohibited

To retire shares, the company would have to announce a tender offer or buys its shares back

Question 37

A pre-recorded phone call that informed the recipients of general market conditions is an example of what type of communication?

Answer 37

It is technically retail communication, but is managed in the same manner as Correspondence

Question 38

If a register representative wants to post business related static content on social media, this communication requires:

Answer 38

Approval by principal prior to use

This is because since it is static, it means it will be available for the long-term, meaning it can be seen by a large number of individuals and that is retail communication and that requires preapproval

Question 39

True or false: 12-b1 fees cover costs of mailing prospectuses to current clients

Answer 39

False

Mailings to current shareholders are not deductible under this plan because it is not aimed at increasing the size of the investor base in the fund since they are already clients

It would cover it if they were potential clients

Question 40

A registered representative can borrow money from a customer that they have an outside business with that’s shared 50/50 IF:

Answer 40

As long as the member firm is notified in writing and the member preapproves

Question 41

In a business continuity plan, the member must provide the possibility of significant business disruption, and how the member plans to respond to events. It must also include a plan recovery time from each scenario and whether it plans to continue in business during the scenario.

Does it need to provide the contact information of the plans to emergency contact people?

Answer 41

No

These individuals are provided to FINRA, not the customers