Primary Markets Flashcards
Which of the following is a primary market activity?
Offer for subscription
Which of the following would not be considered an issue because no new shares are being brought to the market?
Introduction
A firm involved in a base deal with a greenshoe will be able to do which of the following?
Issue more shares if there is sufficient demand
MTNs are normally issued with a maturity of:
Between 2 and 10 years
Which one of the following is not a role of the origination team?
They arrange for the stock to be loaned and borrowed
What is the most common issue method used by the UK Debt Management Office when issuing gilts to institutional investors?
Competitive auction
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?
The chair and the chief executive
An appropriate trading record to be awarded a premium listing or prime standard on exchange is one that shows at least:
A trading history of three years with fully audited accounts
Which of the following are obligations of listing on a main market?
Financial reporting and corporate governance
Which one of the following is normally associated with the term ‘open offer’?
Rights issue
Which of the following two comments apply to an offer for subscription?
It is made by the company
It raises money for the company
Where a lead manager canvasses investors to assess an appropriate price and volume for an issue, it is referred to as:
Bookbuilding
Which one of the following is not a stage associated with the issuing of bonds?
Subscription
Which one of the following would a syndicate group be least likely to market new shares to?
The UK government
Who is responsible primarily for forming a syndicate group when a company wishes to issue a large volume of new shares?
The lead manager
Which one of the following is not a part of the origination team?
The lead manager
Which one of the following is not a part of the origination team?
Market maker
The process of issuing US T-bonds is through a:
Single priced auction
When a firm of underwriters attempts to raise the most amount of money when marketing a new issue, this is known as:
Best efforts
A listed company is required to produce audited accounts at least:
Annually
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
Lead manager
Which one of the following is not normally a stage associated with a typical bond issue?
Pre-emption
A typical new issue of bonds could contain the following stages:
Pitching
Indicative bid
Mandate announcement
Credit rating
Roadshow
Listing
Syndication
Which of the following is the best description of an exchangeable bond?
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
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?
Municipal Bond
A company wishes to issue a very large volume of new shares; this could be facilitated by using which one of the following?
By forming a syndicate group
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?
The shares will be taken-up at a discount to the issue price, and implied in that discount is the underwriter’s fee
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?
The lead manager
The difference between offers for subscription and offers for sale is best described as:
An offer for sale involves an issuing house while an offer for subscription does not
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?
Greenshoe option
In an offer for sale to whom does the company sell its shares?
Directly to the issuing house
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?
Listing agent
Which one of following best describes a bookrunner?
The main underwriter in equity and debt issues
When a company issues shares direct to the public this is known as?
Offer for subscription
Which of the following would an underwriter least like to occur?
Share price falling
Who has the ultimate responsibility for the underwriting of a new issue?
The lead manager
Which of the following listing methods is primarily designed to increase the marketability of a company’s shares?
Introduction
The Student Loan Marketing Association (Sallie Mae) issues what sort of bonds?
Agency
A medium-term note programme benefits from which of the following?
Shelf-registration
stabilisation?
The market price of a new issue may be temporarily higher than it would otherwise be as a result of stabilisation
If the market were to assess the free float of a company, it would calculate the number of shares in the hands of:
The public
When securities are marketed on a best efforts basis, this means which one of the following?
There is no guarantee that all the securities will be issued at a certain price
When an issue in the eurobond market is achieved through a placing, the mandate to issue the bond is awarded to the:
Lead manager
With regard to companies issuing share capital, which of the following is true?
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
A broker buys bonds at a negotiated fixed price and then resells them to its clients. This is known as a:
Bought deal
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
Underwritten
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?
Co-lead manager
Which of the following relates to when a company wishes to take advantage of favourable market conditions by issuing medium-term notes?
Opportunistic issuance
What best describes a placing?
Shares are offered through a broker to a limited range of clients
Stabilisation is best described by which of the following?
The price in the aftermarket is supported by the manager of the new issue buying back securities
Who decides whether a company is appropriate to apply for a quotation on an exchange?
Listing agent
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 non-dilutive secondary issue
Which of the following is true of the continuing obligations for a company when quoted on an exchange?
Companies should produce accounts
Which of the following events will result in an issuer of shares receiving cash?
Pre-emptive rights issue
Placing
In which type of investment may a reverse inquiry be used?
Medium term notes
A listed company must adhere to which of the following?
IFRS
Which of the following is not required of a company seeking a listing on the London Stock Exchange?
Must be a private limited company
What is the main purpose of the syndicate in the issuance of eurobonds?
To underwrite the issue
Which of the following methods of equity issuance is also called ‘selective marketing’?
Placing
Commission on an underwritten issue is calculated on the:
Value of shares underwritten by the underwriter
Which of the following is not true about gilts?
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.
Specifically, in an offer for subscription which of the following parties will prepare the prospectus?
Sponsor, legal advisers and reporting accountants
Which one of the following will guarantee the proceeds raised by a company announcing a new issue of securities?
The underwriters
Which of the following is not normally underwritten?
Placing
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 financial intermediary
In order for a company to list equity on a junior market, what is the market capitalisation required?
There is no limit
By what other term is a follow-on offering also known as?
Secondary offer
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?
Medium-term notes
To which of the following does the term over-allotment option refer?
Issuing more shares
Which of the following is a benefit of marketing your shares on a junior market of the exchange rather than a senior official list?
Lower regulatory burden
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?
Bought deal
A debt origination team is not involved in which of the following?
Debt repayment
If a bond is to be listed, it will first need a prospectus to be submitted to:
The listing authority
The mandate in a new issue of Eurobonds will be given to which ONE of the following?
The lead manager only
Which one of the following would not issue supranational bonds?
Federal Reserve Bank
[1014124] From the issuer’s perspective, which one of the following is not a stage associated with a follow-on offer?
The purchase of securities
Why are municipal bonds issued in the US?
To help states and local governments raise money
By what maximum percentage can an issuing company allow the underwriters to increase the size of the offering if demand is high?
15%
Which of the following is/are true of a nominated adviser on a junior market such as AIM?
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
Who would take on the role of assessing the market conditions for an issue of equity on the exchange?
Corporate broker
All of the following are true of stabilisation except:
It regulates the timing of any announcement regarding IPO details
Bookbuilding is a process described in which one of the following?
Finding buyers for the issuing company’s shares
