Unit 9

Question 1

When can an issuer use an omitting or summary prospectus?

Answer 1

With sales of investment company securities and variable contracts (i.e. mutual funds)

Question 2

Form 10K

Answer 2

This document, also referred to as the annual report, provides extensive information and a detailed overview of a company’s results over the past year.

Question 3

What can be used to estimate a company’s cash flows?

Answer 3

The issuer’s annual report

Question 4

Stock legends placed on restricted securities of a reporting company require that they be fully paid, owned for a minimum of ___ months, and can be sold under Rule 144.

Answer 4

6

Question 5

What information may an issuer change by amending its registration statement after it receives an effective date?

Answer 5

The number of shares being sold

Question 6

Under Rule 147, securities sold within the borders of one state are exempt from…….

Answer 6

Federal registration

Question 7

When trading currencies, investors and financial institutions will buy and sell at the:

Answer 7

spot rate

Question 8

Broker-dealers must keep books and records for ___ years, but they must be in an easily accessible location for the first ___ years.

Answer 8

3; 2

Question 9

The sale of stock of a company that’s not currently filing reports with the SEC is ___________

Answer 9

an IPO

Question 10

A mutual fund may not acquire more than __% of the outstanding shares of another registered investment company.

Answer 10

3%

Question 11

A mutual fund must have a minimum of $_______ capitalization prior to making a public offering

Answer 11

$100,000

Question 12

What is the term that is typically found at the bottom of a corporation’s balance sheet, describes the account policies, commitments made by the company, and potential liabilities and potential losses?

Answer 12

Footnotes

Question 13

________________ are used in private placements and will only be sent to accredited investors.

Answer 13

Offering memorandums

Question 14

If the aggregate market value of equity securities under the adviser’s control exceeds $_____________ on the last trading day of any month, Form 13F must be filed with the SEC.

Answer 14

$100 million

Question 15

When a person acquires ownership of more than 5% of a voting class of a company’s equity securities registered under the Securities Exchange Act of 1934, he is required to file a ___________ with the SEC

Answer 15

Schedule 13D

Question 16

Regulation A (the small-issue exemption) provides an issuer with an exemption from registration with the SEC if it limits the amount of capital raised.Under Regulation A, the two tiers of exemptions are:
 Tier 1 allows for sales of up to $__ million within a 12-month period.
 Tier 2 allows for sales of up to $__ million within a 12-month period.

Answer 16

$20 million; $75 million

Question 17

Regulation A is not a total exemption since the issuer is still required to file an offering statement with the SEC and provide an offering circular (disclosure document) to prospective purchasers. The advantages of these offerings include _____________________ and _____________________

Answer 17

lower legal & filing fees, and a shorter period necessary for document preparation.

Question 18

Under Regulation D, securities may not be sold to more than __ non-accredited investors.

Answer 18

35

Question 19

Under Regulation D, accredited investors include individuals with a net worth that exceeds ___________ or an annual income that exceeds _______________

Answer 19

$1 million; $200,000 ($300,000 for spouses)

Question 20

_______________ is filed quarterly by advisers that control more than $100 million in equity securities as of the last day of any month.

Answer 20

Schedule 13F

Question 21

When are fees assessed on no-load mutual fund shares?

Answer 21

annually

Question 22

What is GAAP?

Answer 22

generally accepted accounting principals

A set of principals that’s used to standardize financial statements and ensure fundamental analysis can be uniformly practiced.