Review Flashcards
1
Q
When selling stock on OTC Pink Sheets, what is the limit?
A
1% of outstanding shares
2
Q
Reg S can only sell to people:
A
Living offshore
3
Q
How does WACC apply to small firms?
A
It’s a size premium that is added
4
Q
PV of Cash Flows:
A
T. Value = FCFn x (1+g)/(r-g)
5
Q
ROIC=
A
EBIAT / Invested Capital or EBIAT / (Avg Debt + Avg Equity)
6
Q
FINRA Comp Limits for IPO, Options & Warrants, Right of First Refusal, and Tail Fee Arrangement:
A
7%, 5 years with strike price at or above offering, 3 years, 2 years.
7
Q
Price / Tangible Book Value Ratio
A
=Equity Value / Book Value of Equity or (Stock Price x shares outstanding) / (SH Equity - Goodwill)
8
Q
Carry Trade
A
Borrow in a currency with low interest and invest in a currency with high interest
9
Q
Credit Arbitrage
A
Invest in ST and LT bonds of the same currency
10
Q
Interest Income & Interest Expense are both components of
A
Operating Cash Flow
11
Q
Shares offered “at the market” must be purchased from:
A
The secondary market
12
Q
Eq Value
A
Total Shares Outstanding x Stock Price or EV - Net Debt
13
Q
EV
A
Eq. Value + Net Debt or Eq. Value - Cash + Pref. Stock + NCI
14
Q
Operating Income or Earnings =
A
EBIT
15
Q
AP Turnover
A
COGS / Avg AP
16
Q
144A is for
A
QIBs
17
Q
Shelf Registration Rule 4 and 5 clock
A
3 years
18
Q
WKSI $1B non-conv deb over what period?
A
3 years
19
Q
Price / Tangible Book Ratio
A
EqV / (Shareholder’s Equity - Goodwill)
20
Q
SA 1933 Section 4(a)(2) & 4(a)(5)?
A
PPs to AIs
21
Q
What type of communication is a FWP?
A
Written
22
Q
Role of Asset Purchase Agreement (APA)?
A
Make a pre-emptive bid on favorable terms
23
Q
Do un-exercisable options contribute to diluted shares outstanding?
A
No
24
Q
Affiliate’s shares are sold by affiliates of the company in the secondary market, do proceeds go to the company?
A
No, they go to the affiliate who sold them.
25
Yield to Worst
Lower of YTC or YTM
26
Equity Turnover
Sales / Avg. SH Equity
27
Priority Status of Debt is also called:
Contractual Subordination
28
Merger proxy is in a Schedule
A Schedule 14A
29
Companies in trouble would most likely seek investment from what kind of fund?
Distressed
30
Schedule 13G vs 13D
Both hold 5% public co stock. D=Direct want to control. G=Passive for Gerald.
31
Ineligible issuers must use a what to issue securites?
Registration statement
32
Large accelerated filers have how long at EOY to file their 10K?
60 calendar days
33
During a tender offer, purchaser files a Schedule TO and Schedule 13D. Target responds on a ________ with investor recommendation.
Schedule 14d-9
34
ROE
NI / Avg Book Value of SH Equity
35
Current Ratio
CA/CL
36
Rule 144 provides exemption from registration for:
Restricted Stock
37
Where is a bankruptcy attorney's asset priority?
After secured creditors, before employee wages
38
Bankruptcy creditor priority:
SPUMPC:
Secured - first lien
Priority - Admin: trustee, bankers, attorneys, wages, benefit plans, Govt
Unsecured - General creditors - Senior, Junior, Exec Pay
Mezzanine
Preferred Stock
Common stock, rights, and warrants
39
Operating Margin
EBIT / Sales
40
Goodwill formula
Purchase Price - MV
41
QIB definition
Institution with over $100M discretionary or BD w/ $10M assets
42
CAPM determines
COE
43
Income taxes on LP are paid by
All partners
44
MLPs do what with gains and losses?
Pass through
45
What is Accretion?
EPS before vs EPS after
46
Control relationships must be disclosed:
before transaction completion
47
AI qualification for companies?
$5M
48
Do preliminary merger proxies always have to be filed with SEC?
Yes
49
When calculating Retained Earnings, when are taxes calculated?
Before dividends
50
Public disclosures are made through an
8-k
51
If a research firm is writing a report on another, with what restrictions can the subject of the report review it?
Old: With certain information omitted, like rating and price target. They can only review facts. New rule: Now they can not review it at all.
52
When can IOIs be collected for a new issue?
After registration statement is filed.
53
In a bankruptcy, deferred comp plans are on par with:
Other unsecured creditors
54
Does new goodwill add to existing goodwill on the acquirer's books?
Yes
55
Form for public disclosure of sensitive information
8-K
56
What are some useful places to get information on precedent transactions?
Merger proxies, target's M&A history, SDC Platinum, Research report.
57
What may be granted super priority in a bankruptcy?
DIP loans
58
Diluted EPS assumes all convertible preferred shares are
converted to common stock
59
Fixed Charge Coverage Ratio formula
(EBIT + Rent Exp.) / (Int. Exp. + Rent Exp.)
60
Short swing profits are considered less than
6 months
61
Restricted period before pricing
ADTV $100k+ or public float $25M+ = 1 business day.
Under the above numbers = 5 business days.
62
Institutional customers (50M+ assets) can be exempt from
Customer Suitability requirements
63
Form S-4 must be signed by:
CEO, CFO, Controller, Majority of BoD.
64
Default Reg M restricted period is __ days before pricing
5 business days
65
Committed financing letters come with
Final bids
66
10-Q includes what two pieces?
Financial statements and market risk disclosure
67
Most important limitation on Reg D Rule 504
Total capital raised - 10M over 12 months.
68
When does the pricing of an IPO take place?
After SEC clears the issue
69
Difference between a Dutch auction and a modified Dutch auction?
Modified allows purchaser to change the price range
70
Comparable Company Analysis vs Precedent Transactions Analysis
Comparable is current prices of publicly traded peers.
Precedent is looking at prices/multiples in prior M&A transactions
71
Who ensures the investor doesn't exceed their CF limit?
The Intermediary
72
Continuous reporting requirements are mandated by what?
SA 1934
73
Do syndicate covering transactions have specific requirements?
No
74
To determine an accelerated filer, when is market cap calculated?
Q2 of the fiscal year
75
Institutional investor requirements
$50M
76
What two situations increase the chances of an SEC review?
MBO & buyer issuing shares with the transaction
77
Who do anti-dilution provisions in IPOs protect?
Pre-IPO investors
78
Goodwill is the amount paid over
Book value
79
Are insider shares outstanding?
No
80
Cram down requirements
1/2 claims and 2/3 of dollar amount
81
Does the management team help prepare the CIM?
Yes
82
Research report requirements - how many people does it need to be distributed to to be a research report?
Recommendations to at least 15 people
83
When does a public company file an 8-K for a PIPE?
Total shares increase by 1% or more
84
What is not required in a Fairness Opinion?
Firms previous experience
85
REITs aren't subject to corporate tax if they:
% assets invested in RE
% income from RE investments
% gains passed through to investors
75
75
90
86
Two differences between 10-K and 10-Q?
Financial statements in 10-Q are unaudited and it does not include a list of major shareholders.
87
PREF14A must be filed X days before the DEF14A.
10
88
Does SOX require a financial expert on the audit committee?
No, it just requires disclosure if there is one.
89
Form 3 is filed when
A person becomes a corporate insider
90
Form 4 is filed any time
A corporate insider trades stock in the open market
91
Form 5 is filed
To report any change in ownership outside the open market
92
Who files a 13F?
Institutional investment managers with $100M or more of discretionary securities.
93
When is a 13F filed?
Quarterly, within 45 calendar days of the end of each quarter
94
Who files a 13E-3?
Public co going private
95
To avoid multiple private placements being treated as one transaction, at least ___ days must elapse without any offerings to investors
30
96
Under Reg D, a company must file Form ___ with the SEC within ___ days after the first sale of securities
D, 15
97
How to calculate the multiple paid for a transaction?
Purchase price = NI x multiple
Purchase price / (NI + after-tax synergies)
98
A buy-side advisor would want all of the following except:
A) a larger break-up fee for a superior offer
B) a tighter sale contract (Definitive Agreement)
C) greater certainty of closing
D) strong cultural fit
D
99
What is DSO and how does it effect A/R?
Days Sales Outstanding, it's a measure of how well a company is managing its AR.
100
Fairness opinions are typically rendered in what kind of transactions?
M&A
101
What do you do with one-time charges when recalculating P/E multiple?
Add them back to NI after-tax, then recalculate.
102
What metric is the best proxy for operating cash flow?
EBITDA
103
Why would a company want to acquire 90% of another company's stock?
It permits a short-form merger.
104
In a fixed price IPO, when must the final list of distribution participants be filed?
3 days after the offering date.
105
Which method of soliciting crowdfunding investments is NOT allowed?
Direct offering to investors (social media or otherwise)
106
When must a prospectus be given to shareholders on a merger?
Prior to the vote (no specific day limit)
107
What kind of stock sale is treated as an asset sale for tax purposes?
338, also called 338(h)(10)
108
When is a research report not considered an offering of securities?
It's regularly published and not overly promotional (it can express opinions.
109
What are the three components of O&O?
Organization and offering expenses are: DD expenses, bona fide issuer expenses, and underwriting compensation.
110
What conditions must be met for an issuer to exchange its own securities?
Limited to existing holders and can not include commission paid to brokers.
111
If a member of the BoD unexpectedly resigns right before an IPO, how is that information disclosed to the public?
Revised term sheet or press release as a FWP.
112
In a 10-K, registrants must report what about foreign countries?
All foreign countries it derives revenues from for the last three fiscal years.
113
The parties to a selected dealer agreement are
the managing underwriter and the selling group members
114
Rule 147 offering can only sell to investors where?
In state.
115
The lead manager in the syndicate is also called the
Book-runner
116
Conflict amount for using an offering to repay debt from a BD?
5%
117
What is the crowdfunding limit per investor?
Greater of $2500 or 5% of annual income or net worth.
118
Easy way to calculate P/E multiple?
Stock Price / EPS
119
"Capital resources" describes what?
Registrant's material commitments for the capital expenditures as of the end of the latest fiscal period.
120
Debt to cap ratio
Total Debt / (Total Debt + Shareholder's Equity)
Total debt includes: current installments of long-term debt, long-term debt, notes payable, loans, bonds, debentures, capital leases.
121
In what capacity does the selling group act in an IPO?
Agency capacity - they accept IOIs
122
An affiliate must file notice with the SEC on Form 144 if they wish to sell (amounts in shares & dollars) in what period?
5,000 shares or $50,000 in aggregate in any three month period. Sale must take place within three months of filing the Form
123
What two components does the total spread consist of?
Where does the underwriting fee come from?
The manager's fee plus the full takedown.
The underwriting fee is part of the full takedown, along with the selling concession.
124
SOX Section 403 requires disclosures by any stockholder with a beneficial interest in
10% or more of any class of any equity
125
Reps and warranties are required with what type of transaction?
Stock-for-stock
126
Marketing emails sent to prospective investors are categorized as what and must be filed when?
FWP and filed on the day of first use
127
Quick Ratio
(CA - Inventory) / CL
128
What type of trust may not own an S corp?
Charitable remainder trust
129
In what two scenarios would a buyer be expected to pay a higher premium for a public target?
All-stock deal and target trading at an all-time low (because investors wouldn't want to sell on the cheap)
130
For what two reasons would a sell-side banker conduct extensive DD on its client?
To better anticipate buyer concerns and better understand the company's investment highlights
131
Is a 363 Sale used to arrange DIP Financing?
No
132
When can a corporate BOD minute book stay unsigned?
As long as 75% of the directors were present, the minutes may remain unsigned.
133
What disclosure is required with a Rule 134 offering?
The securities may not be bought prior to the registration's effective date.
134
If two public companies agree to merge, who has to announce the merger in an 8-K?
Both
135
Can the "public announcement" of a tender offer be written, oral, or both?
Both
136
Where are mortgage bonds in the priority of claims?
Secured creditors
137
Assets = Liabilities + ________
Shareholder's Equity
138
According to Reg M Rules 101 and 102, FINRA must receive notification from offering participants for listed, unlisted, or all securities and only those with a restricted period, without, or all?
All and all
139
In a MLP, who has unlimited liability?
General Partners only. LPs only lose their investment and debts.
140
What is a Standstill Agreement and where is it usually located?
Precludes buyers from making unsolicited offers or purchases of shares or seek to control/influence. Typically found in the Confidentiality Agreement.
141
What's the difference between a qualified and unqualified opinion?
Qualified is negative: limited or couldn't verify info. Unqualified is good: financials fairly reflect the co.
142
If Public Co A wants to acquire Private Co B with stock, where are the terms of the deal made public?
Public Co S-4 (combo and exchange offers)
143
In what case are money market mutual funds exempt from SEC registration and prospectus delivery requirements?
Never
144
Fairness opinions have to disclose whether they evaluated compensation to any insider of the client company. Who are insiders for this requirement?
Directors, officers, or employees
145
For publicly traded bonds, cost of debt for the WACC calculation is determined from
Current yield
146
Intentional disclosures must be followed by a public disclosure when?
Simulaneously
147
If DD is misleading or out of date, what should the banker do?
Alert the party who provided the information so it can be corrected
148
How to calculate share price with EV/LTM NI? You have PE Ratio, NI, and basic shares outstanding.
PE x NI, then / basic shares outstanding
149
Amount to be a Qualified Purchaser (QP)?
5M
150
A public company hires an independent firm to solicit shareholder votes for a proxy contest. What two items must they disclose?
Info about the entities making the solicitation and info about the cost of the solicitation.
151
According to SA1934, how much of its own stock can an issuer repurchase each day?
25% of average daily trading volume
152
In a one-step merger, what two items must the proxy contain?
Description of financial analysis of the fairness opinion and financial advisors, and copy of the definitive purchase/sale agreement
153
Typical lock-up length for an issuer's executives?
180 days, can be 120-365.
154
Can restricted stock of a company pre-IPO be sold after 6 months holding under Rule 144? Why or why not?
No, there's not current information about the issuer since they don't file financial reports.
155
Under a tender offer, do restricted shares require Rule 144 compliance?
No
156
An investment club wants in on an IPO, how do they ensure none of the club members are restricted persons?
Obtain a representation from an authorized rep of the club within 12 months prior to the IPO
157
Does a research department need to notify customers when it plans to terminate coverage on a subject company for equity, debt, or both types of research?
Equity only
158
Why might a seller prefer a stock sale to an asset sale?
Provides a cleaner exit
159
Institutional customer requirements?
Insurance co, bank, or individual or institution with at least 50M in assets
160
A company paid a $0.35 dividend for the most recent quarter, reflecting a 3.4% dividend yield
and a 15.0% dividend payout ratio. Also, the company's book value is $12.00 per share. What is the company's price-to-book value multiple?
Dividend x4 = Annual. Yield/3.4% = $41.18. $41.18/$12.00=3.4x
161
When must accelerated filers file their 10-k?
Within 75 calendar days of fiscal year end
162
Research quiet period for the manager of a follow-on offering?
3 days, 10 for a non-manager. Syndicate members have none. EGC have none
163
When does a broker have to disclose a conflict?
Verbal prior to sale and Written prior to settlement
164
10-Q filing deadline for large accelerated, accelerated, and non-accelerated filers?
40, 40, and 45
165
For the M&A sale process, when does the data room get populated?
By the start of the second round
166
FINRA Rule 2269 requires BDs to give customers a written notice of interest for:
I. Primary offerings
II. Secondary distributions
III. Securities in accounts advised for a fee
All
167
Underwriter participated in three equity deals in the last three years. 200M, 400M, 400M. To serve as a qualified independent underwriter, the new deal must have proceeds of:
QIU needs at least three public equity offerings in last three years, all three not less than 50% of anticipated proceeds. Double the size of the smallest deal. -No more than 400M.
168
Price-to-Book Value and Price-to-Tangible-Book Value are most useful in valuing what types of companies?
Financial services - most items on balance sheet are shown at FMV
169
Ineligible issuers cannot use what two priviledges?
FWP & Shelf Registration
170
Do Reg S investors need to be accredited?
No
171
Which document contains the compensation of public co's execs and directors?
Proxy statement
172
When does a broker need to obtain customer information for the Suitability Rule?
Before execution
173
Total Debt =
ST debt (current maturities) + loans + notes + bonds + debentures + capital leases
174
Treasury Stock calculation formula =
(Current price - avg exercise price) / (current price x number of options shares)
175
A DPP raises 50M in gross proceeds. What amount can go to O&O expenses?
7.5M; 15%
176
After registration of an IPO, can information be corrected on the red herring with a FWP?
No, the information conflicts with the red herring and the registration and red herring must be amended.
177
Would a banker use EV/NI? Why?
No, EV includes both debt and equity
178
A company has an inventory turns multiple of 4.0x and COGS of $750M. What is the avg inventory?
$187.5M = 750/4
179
A research analyst at a non-deal road show can't communicate with customers in the presence of
IBs or reps of the securities issuer
180
Which filing does a business need for an all-cash transaction with no change of securities?
Proxy only
181
What is a Proof of Interest for?
Equity holder in CH 11 that wants to be treated as a creditor
182
Assuming no other issues, what is the key gating item for closing a deal in a timely manner?
Raising funds through a capital markets transaction
183
In an M&A, what percentage of shares offered as part of the cost consideration requires shareholder approval?
20%
184
What are the two requirements for Rule 139 for research reports?
Issuer must have filed all periodic reports over the preceding 12 months and the issuer must meet requirements for using Form S-3 or F-3.
185
Bad actor disqualification of an issuer for crowdfunding eligibility, subject to SEC disciplinary action over what period?
Past 5 years
186
When can a BD with a conflict selling IPO securities, sell those securities into a discretionary account?
With specific written permission
187
EVA calculation?
EVA = EBIAT - (WACC x Investment)
[WACC is Discount Rate]
188
When calculating adjustments to EBITDA, how do tax rates factor in?
They don't, EBITDA is pre-tax.
189
DSO formula
AR / Sales x 365
190
What term describes a company's
total borrowings, notes and bonds,
and capitalized leases?
Funded debt
191
What does high operating leverage mean for fixed and variable costs?
High Op Leverage = High Fixed Costs and Low Variable Costs
192
An IB takes an IOI from his client. When does he have to deliver the preliminary prospectus?
At least 48 hours before the order is consummated
193
A loan covenant specifies that a company must maintain a current ratio equal to or greater than 120% and working capital of not less than $12 million. The company has current liabilities of $50 million. What is the minimum amount of current assets it must maintain to meet both requirements?
$62M: 120% is 60, but working capital is a higher requirement at 50+12.
194
What are the two contracts setting terms for an underwriting and what do they define?
Underwriting Agreement defines terms of the arrangement between the securities issuer and the underwriting group.
Agreement Among Underwriters defines terms among all underwriters, including share allocations and compensation.
195
When examining an acquisition, if not able to physically inspect all locations, what would a firm do to confirm overseas estate holdings?
Obtain a copy of legal titles
196
When can an offering be made to non-accredited investors without a PPM?
If the offering is less than $10M
197
Under Rule 433, a "bona fide electronic road show" is a presentation using written communication to offer securities by
any graphic means
198
Maximum common stock limit for an issuer to file a Form S-3?
33.3% of public float over the previous 12 months
199
Would a labor union contract expiring around the time of an acquisition be an opportunity to raise the sale price?
No, uncertainty like that would make buyers nervous
200
An investor relies on a prospectus dated October 1 to buy shares in an IPO. The sale takes place on October 10. The October 1 version of the prospectus contains errors, and the investor sues for damages. However, the October 1 prospectus is "stickered" with a replacement prospectus, correcting all errors, dated October 7. What damages may be claimed by the investor?
Actual losses based on the change in price from October 7 through October 10
201
Rule 144 applies to the sale of securities that (pick 2)
I. were acquired by investors through unregistered, private transactions
II. are considered control securities because they are held by an affiliate of the issuer
III. were acquired by non-affiliates through an open market transaction
IV. must under all circumstances satisfy a holding period before they can be sold
I and II
202
What value method is good for companies in highly cyclical industries?
EV to EBITDA ratio
203
How many days prior to filing a registration statement might an announcement like forward-looking projections be considered gun-jumping?
30 days
204
When raising capital for crowdfunding, what financial information must be disclosed on Form C?
Info for current and prior year
205
If an offering will not terminate until the target amount is reached, what kind of offering is it?
Best-efforts
206
For a stabilizing bid after an IPO, what can the broker bid?
Higher of the most recent transaction price or best independent bid
207
When does the fee for writing a fairness opinion have to be disclosed?
Never
208
Current Ratio= CA/CL, which line items do you use on the balance sheet?
Total Current Assets / Total Current Liabilities
209
Which of the following most closely approximates free cash flow?
A) EBIT + Capex
B) Gross Profit - Depreciation & Amortization
C) Net Income + Interest - Capex
D) EBITDA + Capex
C) Net Income + Interest - Capex
210
Do you need Target tax rate to calculate accretion/dilution analysis?
No, you need the buyer's tax rate
211
Are prospective underwriters considered distribution participants?
No, only those who participate in the offering, including customers
212
Where do stabilizing expenses come from?
They are deducted from the underwriting fee, along with all syndicate expenses
213
Does a target company have to communicate to shareholders on a tender offer, even if it's neutral?
Yes
214
What is Net Debt?
Debt - Cash
215
If a company accrues an expense on its income statement, but the tax deduction is taken later, what is this called?
Deferred tax asset
216
If a company repurchases shares in the open market, what happens to outstanding shares and interest income?
They both decrease, interest income because the company no longer earns interest on the cash it used to buy back shares.
217
What types of bonds are most sensitive to fluctuating interest rates?
Long-term, low coupon bonds, especially zero coupon bonds
218
Proxy statements include what information about board attendance?
The names of any directors who did not attend at least 75% of previous year's meetings
219
What is an unseasoned issuer?
Public float under 75M or filer for less than 1 year
220
When a company files for CH 11, does the board remain intact?
Yes
221
Reg A+ is exempt for what type and size of offering?
A public offering of up to $75M in any 12-month period.
222
Can a research analyst attend a road show with an IB?
No, never
223
If an investor tendering shares receives additional compensation, like a pay package, who approves it?
A majority of the company's compensation committee
224
What is a GARP investor?
Growth At Reasonable Price (stocks)
225
In bring-down DD, an advisor usually receives the comfort letter from whom?
The accounting team
226
If a lead bookrunner exercises an overallotment option, when is the distribution deemed completed?
After the securities have been
distributed and trading restrictions
are terminated
227
During a "blackout period", an analyst cannot
Make public appearances or issue research for the issuer's securities
228
When recalculating EBITDA add-backs (one-time fees), if something is net, what do you do?
Gross it up by adding back the taxes paid, then add it back to EBITDA
229
ROIC measures what?
The return generated by all capital provided to a company
230
Is an MLP an appropriate tax-advantaged vehicle for hundreds of investors?
Yes, they can go public and have unlimited shareholders
231
Is short tendering stock permitted?
No, they can only offer up the amount of their long position.
232
For a company with steadily rising earnings, what will be the relationship between the forward P/E multiple and the LTM P/E multiple?
LTM P/E multiple will be higher
233
In a normal market, what buyer would be expected to pay the highest price for a company?
Large strategic buyer in the same line of business, due to synergies
234
Are QIBs required to receive an offering circular in a private placement?
Never
235
What is the cost of capital with a PIPE compared to a public offering?
Investors would a higher cost of capital due to the shares being illiquid
236
What is required in all business combinations that require a shareholder vote?
A proxy
237
The "prudent man" burden of proof applies on what date?
Effective date of the offering
238
In a business combination, which company prepares the registration statement prospectus?
Both
239
Variations in road shows are permissible, as long as all investors receive the same
"core presentation"
240
What is "stapled financing"?
Committed financing structure for buyers in support of a target being sold
241
Accrued liabilities are what?
On the balance sheet, but not yet paid
242
Equity Value calculated with stock price?
Stock price x Outstanding Shares
243
What is the PV today of 100M free cash flow at the end of the first year, with a WACC of 10%?
100M / (1.10)^1 = 91M
244
An IB can contact a credit ratings agency for what?
Obtain comparable debt issuances
245
Are proxy statements required in a two-step merger?
No
246
How to calculate unlevered beta?
Levered beta / (1+D/E x (1-tax rate))
247
CoE formula (CAPM)
Risk-free rate + (Levered Beta x Market Risk Premium)
248
Where would you find information on an impairment charge?
Management's discussion and analysis on 10-K and 10-Q
249
For shelf registration, when is the determination of WKSI made?
Most recent filing or amendment (700M market cap or 1B issuance test)
250
Dividend discount calculation (to find stock price) =
Stock price = last year's dividend x (1+growth rate) / (discount rate - growth rate)
Or Next Year's Div / Disc. Rate - GR)
ex: $0.40 x (1+0.03)/(0.05-0.03)=$20.60
251
Which disclosure document would not contain a full income statement?
8-K
252
Under Reg FD, a company can use its website to make broad distribution of information, provided the website is
broadly available and a recognized channel of distribution
253
QIB amount?
$100M or insurance co, investment co, BD co, IA, or BD with at least 10M in discretionary assets
254
ROA
NI / Average Assets
255
When can Reg FD prevent companies from making selective disclosure to employees?
Never, they can always disclose information to employees
256
Which is a cheaper option for debt, Convertible Debt or Debentures?
Convertible Debt
257
Requirements for a BD in selecting members of its Fairness Committee?
Document selection process and qualifications in written procedures
258
When is it prohibited to allocate IPO shares to a previous or potential client?
Business in last 12 months or next 3 months
259
What is an underwriter's best defense against lawsuits?
Demonstrate effective DD
260
Gross Profit Margin formula
(Rev - Cost of Rev) / Rev
261
If interest rates are high, what's a good way to get cash while avoiding dilution of SH?
Rights offering
262
Best valuation multiple for divisions of public companies?
EV/EBIT, it removes D&A. EV/EBITDA is the standard for most sectors
263
Does a direct listing have a stabilization agent?
No
264
Current Yield of bond
NY/Price
265
Post-tax cost of debt for a bond?
CY x (1 - Tax rate)
266
Status of a company's financial position at a particular point in time is best measured by what financial statement?
BS
267
In an IPO, what fee does an underwriter receive for their allocation of shares?
Underwriting fee
268
Can IB personnel review an equity research report prior to publication?
No, never (recent rule change).
269
Schedule TO is required for an entity expected to own X% of a class of securities?
5%
270
Legal document issued with corporate bonds?
Trust indenture
271
When is joint due diligence permitted?
For underwriting of an EGC (under 1B in sales for the most recent fiscal year)
272
What layer of capital is between traditional debt and equity?
Mezzanine debt
273
How long after the effective date of an IPO does the syndicate have to complete final settlement of their accounts?
30 days
274
Which of these can qualify as a WKSI?
Registered investment companies
Business development companies
Asset-backed issuers
Foreign issuers
Foreign issuers, if they meet the market cap and issuance requirements
275
A foreign issuer wishing to file a "short-form" registration statement for newly issued securities would complete a
Form F-3
276
Formula for effective EBIT mulitple?
EBIT x multiple, then divide by EBIT + synergies
277
What is the most filed SEC form for large public companies?
8-K
278
Where is book value of equity on the BS?
"Total stockholder's equity"
279
When do selling shareholders vote on an M&A deal?
Always
280
Who can use a shelf registration?
WKSI's, Seasoned and Unseasoned Issuers. WKSI's shelf registration can be automatic.
281
When can a research analyst attend a road show?
Never
282
ROE
NI / Avg SH Eq
283
A crowdfunding issuer wishes to offer its stock to the public in a way that prospective investors will have access to investment advice and recommendations before committing. How can this be done?
Use a BD as an intermediary
284
GARP investors like what kind of PE multiple?
Low PE
285
Under Reg D, companies must file Form D with the SEC within
15 days of the first sale
286
In a direct listing on the Nasdaq, who must a Form 10 be filed with?
SEC, FINRA, and Nasdaq
287
When does book-building occur?
After filing SEC registration
288
Proxy for Cash Flow (formula)
NI + D&A
289
An increase in current assets represents a ____ of cash
Use of cash
290
How do you calculate FCF from IS?
Cash flow from operations - CapEx
291
EVA=
(EBIAT x (1- tax rate)) - (Investment x WACC)
Or
EBIA - (Investment x WACC)
292
EV Calc with Annual Cash flow, WACC, and Growth Rate
Annual CF / (WACC - GR)
293
How long must a change in tender offer remain open?
Minimum of 10 days
294
ROA
NI / Avg Assets
295
Document required by an investment manager, disclosing holdings of long equity positions, filed quarterly?
13-F
296
What is required in a summary term sheet?
Plain English, bullet-point summary, and essential features of the transaction
297
What restricted trading period do "actively traded securities" have?
None, they are not subject to a restricted trading period
298
Under FINRA rules, what bona fide issuer expenses fall into "miscellaneous"?
None, they must all be in clearly defined categories
299
Which of these are "fiduciaries"?
Broker-dealers
Transfer agent
Registered Rep
Trustee
Transfer agents and Trustees
300
If gross profit increases, does net income increase more, less, or the same?
Less, because it's an after-tax figure
301
Under Reg M, what is the restricted period for securities with ADTV of 1M+ and public float of 150M+?
No restricted period - these are "actively traded securities"
302
The primary purpose of Reg FD is to prevent
selective disclosure of material information to outsiders
303
Do FINRA members have to disclose fees for fairness opinions?
Base: no. Contingent on deal closing: yes.
304
Is Debt/Sales a good credit statistic?
No, Debt/EBITDA, Coverage ratios, and Debt/Cap are all good.
305
Who usually leads drafting a DA?
Legal counsel
306
What happens on the balance sheet during a share repurchase program?
Shareholder's Equity decreases by the acquisition cost of the repurchased shares
307
When a company buys back shares, what happens to the P/E ratio?
It will decrease due to less shares and the same earnings to distribute across fewer shares
308
Each offering sold under a shelf registration would have what document with it?
Prospectus supplement
309
When a partnership dissolves, whose account is last to settle?
GP -> Secured lenders, General creditors, LPs, GPs
310
Syndicate settlement must occur within how many days of the settlement date?
90
311
Complete sequence for an IB during an IPO?
1) Pitch for business (bake-off),
2) Win mandate,
3) Sign engagement letter,
4) File registration statement,
5) Book building/marketing,
6) Go effective (shares are registered under '33 Act),
7) Confirm allocations and distribute securities to investors
312
When are tender offers most advisable?
For a fast closing and with cash ready
313
Price/Tangible Book Value=
EqV / (SE - Goodwill)
314
ROIC can be calculated with which two metrics, depending on information available?
Adjusted EBIT/ Invested Capital or
EBIAT / Invested Capital
*IC = Debt + Equity - Cash
315
Accelerated filers fall within what market cap range?
$75M-700M
316
Safe harbor Rule 10b-18 apply to an issuer purchasing its own:
Common stock
317
Reg M prohibition on short sales applies to whom?
All investors
318
Cost of Debt calculation for a bond?
CY x After-tax
*Coupon/Price finds CY
