SIE Unit 1

Question 1

Best Efforts Underwriting

Answer 1

Underwriters sell securities from the issuer purely as an agent

Question 2

Firm Commitment Underwriting

Answer 2

Underwriters buy securities from issuer and assume full responsibility of selling them

Question 3

Syndicate

Answer 3

Joint venture where broker dealers share risk and profits from the offering

Question 4

Institutional Investor

Answer 4

Entities that pool money (banks, investment companies, employee benefit plans, hedge funds)

Question 5

Accredited Investors

Answer 5

Subset made up of all institutional investors and some retail

Question 6

Qualifications To Become An Accredited Investor

Answer 6

Insider of issuer, income of $200,000 or more past 2 years/$1,000,000 net worth, holders in good standing of Series 7, 65, and 82.

Question 7

Registration Statement

Answer 7

Filed if security does not meet requirements of 1933 Act

Question 8

Hybrid Offer

Answer 8

Existing shareholders sell some of their shares along with the newly issued shares

Question 9

Preliminary Prospectus

Answer 9

Allows issuers and underwriters to gauge investor interest

Question 10

Shelf Offering

Answer 10

Already publicly traded company registers new securities but doesn’t sell until later (two year period)

Question 11

Two Things Exchanges Are Defined By

Answer 11

Physical location, pricing system

Question 12

Two-Dollar Broker

Answer 12

Members that assist floor brokers in making trades and receive compensation in return

Question 13

Carrying Firm

Answer 13

Provides back office support for brokers; duties include carrying customer accounts and accepting funds/securities from customers

Question 14

Prime Account

Answer 14

Provides a client with the ability to trade with multiple brokerage houses while maintaining a centralized master account

Question 15

Transfer Agent

Answer 15

Responsible for ensuring securities are issued in correct owner’s name, cancel old and issue new certificates, maintaining records, and handling lost/destroyed certificates

Question 16

Clearing Agency

Answer 16

Intermediary between buy and sell side of a transaction

Question 17

Trustee

Answer 17

An institution or person responsible for making all investment, management, and distribution decisions in an account maintained in the best interests of another who has been legally appointed to provide these services

Question 18

GTC

Answer 18

Good Till Cancel

Question 19

FOK

Answer 19

Fill Or Kill

Question 20

AON

Answer 20

All Or None

Question 21

What Red Herring Is Also Known As

Answer 21

Preliminary Prospectus; Filed before IPO

Question 22

Third Market

Answer 22

Where Exchange Listed Securities Are Traded In the OTC Market

Question 23

Who Tombstone Advertisements Can Be Placed By

Answer 23

Issuer

Question 24

Market Makers

Answer 24

Brokers Who Incorporate Proprietary Trading Into Their Business

Question 25

Bid x Ask

Answer 25

Shares available to sell x Shares available to buy

Question 26

Function Of Clearing Agency

Answer 26

Recieves and delivers payments and securities on behalf of both parties

Question 27

When Trades For Government Securities Settle

Answer 27

1 Business Day

Question 28

Exempt Issuers Under Securities Act of 1933

Answer 28

Federal govt, state govt, and charities

Question 29

Carrying Firm

Answer 29

Member firm that handles back-office tasks like clearing trades, selling confirmations, custody of customer funds, etc.

Question 30

When Options Settle

Answer 30

T + 1

Question 31

What Broker-Dealer Is Acting As When They Do Not Charge The Customer A Commission

Answer 31

Principal

Question 32

Maximum number of nonaccredited investors allowed in a Regulation D exempt transaction under Rule 506(b)

Answer 32

35

Question 33

Most likely indicate shares of stock were held in electronic form

Answer 33

Held in street name

Question 34

Final Prospectus

Answer 34

Meets the full and fair disclosure requirements of the Securities Act of 1933

Question 35

When 20-Day Cooling Off Period Is Resumed After Issuance of Deficiency Letter

Answer 35

On The Date Corrected Registration Is Recieved

Question 36

Investment Advisers Act of 1940

Answer 36

Regulates firms that offers advice on securities for a fee on a regular basis