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Primary Markets Flashcards

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SIE Exam flashcards
1
Q

Which of the following is a primary market activity?

A

Offer for subscription

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2
Q

Which of the following would not be considered an issue because no new shares are being brought to the market?

A

Introduction

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3
Q

A firm involved in a base deal with a greenshoe will be able to do which of the following?

A

Issue more shares if there is sufficient demand

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4
Q

MTNs are normally issued with a maturity of:

A

Between 2 and 10 years

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5
Q

Which one of the following is not a role of the origination team?

A

They arrange for the stock to be loaned and borrowed

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6
Q

What is the most common issue method used by the UK Debt Management Office when issuing gilts to institutional investors?

A

Competitive auction

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7
Q

Corporate governance can be described as a set of rules, laws and customs which guide a company. Which roles within a company should ideally be split between different individuals?

A

The chair and the chief executive

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8
Q

An appropriate trading record to be awarded a premium listing or prime standard on exchange is one that shows at least:

A

A trading history of three years with fully audited accounts

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9
Q

Which of the following are obligations of listing on a main market?

A

Financial reporting and corporate governance

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10
Q

Which one of the following is normally associated with the term ‘open offer’?

A

Rights issue

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11
Q

Which of the following two comments apply to an offer for subscription?

A

It is made by the company

It raises money for the company

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12
Q

Where a lead manager canvasses investors to assess an appropriate price and volume for an issue, it is referred to as:

A

Bookbuilding

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13
Q

Which one of the following is not a stage associated with the issuing of bonds?

A

Subscription

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14
Q

Which one of the following would a syndicate group be least likely to market new shares to?

A

The UK government

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15
Q

Who is responsible primarily for forming a syndicate group when a company wishes to issue a large volume of new shares?

A

The lead manager

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16
Q

Which one of the following is not a part of the origination team?

A

The lead manager

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17
Q

Which one of the following is not a part of the origination team?

A

Market maker

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18
Q

The process of issuing US T-bonds is through a:

A

Single priced auction

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19
Q

When a firm of underwriters attempts to raise the most amount of money when marketing a new issue, this is known as:

A

Best efforts

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20
Q

A listed company is required to produce audited accounts at least:

A

Annually

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21
Q

In a large listing involving a syndicate, which of the following would be responsible for coordinating the overall level of demand across the syndicate?
A

A

Lead manager

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22
Q

Which one of the following is not normally a stage associated with a typical bond issue?

A

Pre-emption
A typical new issue of bonds could contain the following stages:

Pitching

Indicative bid

Mandate announcement

Credit rating

Roadshow

Listing

Syndication

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23
Q

Which of the following is the best description of an exchangeable bond?

A

A bond with a fixed coupon and a set redemption date where the holder can exchange the nominal value for other shares held by the issuer

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24
Q

A bond that has been issued on a monoline basis that also includes potential tax breaks for holders of the bond is most likely to be what type of bond?

A

Municipal Bond

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25
Q

A company wishes to issue a very large volume of new shares; this could be facilitated by using which one of the following?

A

By forming a syndicate group

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26
Q

An underwriter guarantees to purchase any stock of company A that fails to be taken-up in an IPO. At what price is the underwriter likely to make this purchase if called on to do so?

A

The shares will be taken-up at a discount to the issue price, and implied in that discount is the underwriter’s fee

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27
Q

A company is enlisting the help of an investment bank to issue a large number of shares to the public. Primarily which of the following roles is the investment bank performing?

A

The lead manager

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28
Q

The difference between offers for subscription and offers for sale is best described as:

A

An offer for sale involves an issuing house while an offer for subscription does not

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29
Q

When a company instructs the underwriters to increase the size of the offering by a maximum of 15%, this is known as which of the following?

A

Greenshoe option

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30
Q

In an offer for sale to whom does the company sell its shares?

A

Directly to the issuing house

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31
Q

A company wishes to issue shares on an exchange. Which of the following takes a central role for the company in advising the directors of their responsibilities?

A

Listing agent

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32
Q

Which one of following best describes a bookrunner?

A

The main underwriter in equity and debt issues

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33
Q

When a company issues shares direct to the public this is known as?

A

Offer for subscription

34
Q

Which of the following would an underwriter least like to occur?

A

Share price falling

35
Q

Who has the ultimate responsibility for the underwriting of a new issue?

A

The lead manager

36
Q

Which of the following listing methods is primarily designed to increase the marketability of a company’s shares?

A

Introduction

37
Q

The Student Loan Marketing Association (Sallie Mae) issues what sort of bonds?

A

Agency

38
Q

A medium-term note programme benefits from which of the following?

A

Shelf-registration

39
Q

stabilisation?

A

The market price of a new issue may be temporarily higher than it would otherwise be as a result of stabilisation

40
Q

If the market were to assess the free float of a company, it would calculate the number of shares in the hands of:

A

The public

41
Q

When securities are marketed on a best efforts basis, this means which one of the following?

A

There is no guarantee that all the securities will be issued at a certain price

42
Q

When an issue in the eurobond market is achieved through a placing, the mandate to issue the bond is awarded to the:

A

Lead manager

43
Q

With regard to companies issuing share capital, which of the following is true?

A

Public limited companies’ shares can be, but not must be, partly paid on issue. The company can decide when the remaining nominal value is paid

44
Q

A broker buys bonds at a negotiated fixed price and then resells them to its clients. This is known as a:

A

Bought deal

45
Q

An investment bank has guaranteed the proceeds of an issue with a company prior to the issue. This issue is known as which one of the following

A

Underwritten

46
Q

A company is seeking a dual listing in both the the UK and USA for which a syndicate has been formed. The UK firm handling the UK listing would have which role within the syndicate?

A

Co-lead manager

47
Q

Which of the following relates to when a company wishes to take advantage of favourable market conditions by issuing medium-term notes?

A

Opportunistic issuance

48
Q

What best describes a placing?

A

Shares are offered through a broker to a limited range of clients

49
Q

Stabilisation is best described by which of the following?

A

The price in the aftermarket is supported by the manager of the new issue buying back securities

50
Q

Who decides whether a company is appropriate to apply for a quotation on an exchange?

A

Listing agent

51
Q

A company has successfully released shares into the market through an initial public offer. The members of the board of directors have personal debts which they wish to pay off. Which of the following BEST describes the method used to help achieve their objective?

A

A non-dilutive secondary issue

52
Q

Which of the following is true of the continuing obligations for a company when quoted on an exchange?

A

Companies should produce accounts

53
Q

Which of the following events will result in an issuer of shares receiving cash?

A

Pre-emptive rights issue

Placing

54
Q

In which type of investment may a reverse inquiry be used?

A

Medium term notes

55
Q

A listed company must adhere to which of the following?

A

IFRS

56
Q

Which of the following is not required of a company seeking a listing on the London Stock Exchange?

A

Must be a private limited company

57
Q

What is the main purpose of the syndicate in the issuance of eurobonds?

A

To underwrite the issue

58
Q

Which of the following methods of equity issuance is also called ‘selective marketing’?

A

Placing

59
Q

Commission on an underwritten issue is calculated on the:

A

Value of shares underwritten by the underwriter

60
Q

Which of the following is not true about gilts?

A

GEMMs are obliged to bid for and take up all gilts in an auction

Each competitive bid has to be made for a minimum of £1,000,000 nominal value. However, UK Debt Management Office cannot force GEMMs to take up all gilts in an auction.

61
Q

Specifically, in an offer for subscription which of the following parties will prepare the prospectus?

A

Sponsor, legal advisers and reporting accountants

62
Q

Which one of the following will guarantee the proceeds raised by a company announcing a new issue of securities?

A

The underwriters

63
Q

Which of the following is not normally underwritten?

A

Placing

64
Q

Claire is asked if she would like to participate in the purchase of shares of a company in a selective marketing process. Who would have most likely made this approach?

A

A financial intermediary

65
Q

In order for a company to list equity on a junior market, what is the market capitalisation required?

A

There is no limit

66
Q

By what other term is a follow-on offering also known as?

A

Secondary offer

67
Q

A large institutional investor wishes to buy a bond that pays a particular coupon rate, with a particular redemption date and from a particular issuer. Which is the best way of doing this?

A

Medium-term notes

68
Q

To which of the following does the term over-allotment option refer?

A

Issuing more shares

69
Q

Which of the following is a benefit of marketing your shares on a junior market of the exchange rather than a senior official list?

A

Lower regulatory burden

70
Q

What is the term used for a eurobond issue where the issuer reaches a firm agreement with the lead manager to purchase the entire issue?

A

Bought deal

71
Q

A debt origination team is not involved in which of the following?

A

Debt repayment

72
Q

If a bond is to be listed, it will first need a prospectus to be submitted to:

A

The listing authority

73
Q

The mandate in a new issue of Eurobonds will be given to which ONE of the following?

A

The lead manager only

74
Q

Which one of the following would not issue supranational bonds?

A

Federal Reserve Bank

75
Q

[1014124] From the issuer’s perspective, which one of the following is not a stage associated with a follow-on offer?

A

The purchase of securities

76
Q

Why are municipal bonds issued in the US?

A

To help states and local governments raise money

77
Q

By what maximum percentage can an issuing company allow the underwriters to increase the size of the offering if demand is high?

A

15%

78
Q

Which of the following is/are true of a nominated adviser on a junior market such as AIM?

A

They are responsible for assisting a company through the application process
They must be approved by the exchange
They are always retained to advise directors of their responsibilities on an ongoing basis

79
Q

Who would take on the role of assessing the market conditions for an issue of equity on the exchange?

A

Corporate broker

80
Q

All of the following are true of stabilisation except:

A

It regulates the timing of any announcement regarding IPO details

81
Q

Bookbuilding is a process described in which one of the following?

A

Finding buyers for the issuing company’s shares

Securities (19 decks)

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