Series 79

Consider Exhibit 8. Assuming that M&R Amusement Inc has 140 million Shares Outstanding, a share price of $14.15 and a P/E ratio of 4.2×, what is ABC Company's Price/Book ratio?

3.48×

After a decision has been reached, payment of an award determined through arbitration must be made within

30 days

Investors who diversify their portfolios with companies in different industries are typically able to avoid

non-systemic risk

The rules of Regulation S address stock that is sold

outside of the U.S. and is not registered

NewPublicCo raises capital by selling shares to the public at $58.00 per share. The spread is equal to 6% of the total proceeds. What would be a reasonable estimate of the manager's fee for this transaction?

$0.70 (manager and underwriter fees are usually both 20% of the gross spread)

A company has a DIH of 75, COGS of $725 million, and sales of $1.25 billion, what is the company's inventory amount?

$148.97 million ((COGS / 365) * DIH)

Company F has $1,000,000 of 10% 30 year bonds outstanding with a current yield of 10.5%. The company refinances all $1,000,000 to a 7% rate. Assuming a marginal tax rate of 40%, what is the annual increase to Company F's net income?

$18,000 (tax effected difference between the nominal yield of prior debt and the refinanced rate)

ABC stock is traded on the New York Stock Exchange. If a dividend is declared by the ABC Board of Directors, the NYSE must be notified no later than

10 business days prior to the record date

A company has 1,200,000 Shares Outstanding, which are trading at $8.50. Its latest year Sales were $8,500,000 and latest year Net Income was $950,000. What is the company's P/E ratio?

10.74×

Use Exhibit 68 to answer the following question. What is Company P's Price / Tangible Book Value Ratio?

1105% (Price / Tangible Book Value = Equity Value / (Shareholders Equity - Goodwill)

In a targeted auction, how many competitors is a buyer typically competing against in order to get past the first round?

5-15

During a Regulation A offering, the issuer will aggregate transactions over what period of time for purposes of reporting to the SEC?

6 months

The statute of limitations for arbitration is

6 years from the occurrence or event giving rise to the claim.

The nominal yield on a $1,000 par value bond with a coupon of 7.5% would be which of the following?

7.50%

All of the following investors would be considered Qualified Institutional Buyers EXCEPT

An individual investor with a securities portfolio of $75 million

Which of the following would be classified as a QIB?

A $1 billion hedge fund (A hedge fund with assets under management of $1 billion would be a qualified institutional buyer as the threshold is assets under management of at least $100 million)

All of the following statements regarding a broker-dealer's Firm Element training program are true EXCEPT

A broker-dealer's training plan must be approved by its SRO prior to implementation

Which of the following best describes a bring down due diligence meeting?

A call to capture any changes since the last due diligence meeting

Which of the following investors could purchase an IPO?

A family member of an employee of a broker dealer who is not an underwriter on that particular transaction.

A registrant with a worldwide non-affiliate market capitalization of $600 million, would be classified a

Accelerated filer

A broker dealer's restricted list, which is a list of securities that its employees cannot trade, will generally include all of the following EXCEPT

An explanation of why the security was added to or deleted from the list

When are management presentations typically held within the context of an M&A process?

At the start of the second round once bidders have been pared down

In the context of an offering for a Direct Participation Program fees paid to transfer agents, escrow agents and engineers; and fees paid for legal and accounting services provided to the sponsor are examples of

Bona fide issuer expenses

The "refreshing requirements" for a shelf registration applies to

Both automatic and non-automatic registrations, with different maximum periods for each (The maximum period for offering automatic shelf registrations is three years after the effective date. The maximum period for non-automatic shelf registrations is 180 days after the third anniversary. In both cases, these periods can be refreshed by filing a new registration statement)

According to SEC guidance, a company may use its own Website to make broad distribution of information to the public under Regulation FD, provided the Website is

Broadly available and a recognized channel of distribution

A foundation has assets of $30 million and is subject to the customer suitability information-gathering standards of FINRA Rule 2111. How can the foundation "opt out" of providing this information?

By affirmatively indicating a desire to forego suitability protections

All of the following company materials are provided by the company to its sell-side adviser so they can perform upfront due diligence on the target EXCEPT

CIM

Brokers Dealer A and Broker Dealer B are co-bookrunners on a debt offering for XYZ Co, Inc. BD A has a 30% allocation, BD B has a 20% allocation, and other underwriters share the remainder. During pricing negotiations between the co-bookrunners and ABC, the deal is expected to raise between $400 million and $900 million of debt at a rate of UST +80. The deal ends up being priced at $700 million. ABC is disappointed that the final pricing was below the top end of the range. What could the underwriters have done differently to price the deal at $900 million.

Change the terms of the debt offering during pricing talks (meaning issue the bonds at a higher interest rate -- this would increase demand more than including more banks in the underwriting syndicate)

Which type of preferred stock has a claim to prior years' dividends if they were not previously paid?

Cumulative

DEF Co, Inc., an SEC filer in good standing, has a non-affiliate market capitalization of $900 million. If DEF desires to raise equity via a follow-on offering, all of the following are true EXCEPT

DEF can file a registration statement but must wait for SEC review before selling the securities to the public

The common stock of a staple food company is most likely classified as a(n)

Defensive stock

All of the following documents are used in the first round of an auction process EXCEPT a(n)

Definitive agreement

FINRA is authorized to enforce the rules of all the following EXCEPT

Federal Reserve Board

For book-building purposes, which SEC forms are used to track transactions by corporate insiders?

Forms 3, 4 and 5

Tim is a registered representative who has a control relationship with the issuer of securities. He makes an offer of the issuer's securities to his clients, the Howells. At the time of the offer, he makes a verbal disclosure of his control relationship. Assuming the Howells want to buy the securities, what else must he do to avoid deception and manipulation?

He must disclose the control relationship in writing prior to the sale's completion

All of the following persons are prohibited from benefiting from short swing profits EXCEPT

Heads of research in brokerage offices (The Act of 1934 prohibits short-swing profits (profits realized in any period less than six months) by corporate insiders in their own corporation's stock)

All of the following are companies for whom the P/E ratio might be irrelevant EXCEPT

Highly profitable company

A former affiliate of an issuer may sell their shares under Rule 144 after meeting which of the following conditions? I. The individual has not been an affiliate of the issuer for three months II. The individual has held the restricted securities for at least one year III. The individual has not been an affiliate of the issuer for six months IV. The individual has held the restricted securities for at least two years

I and II

When violations of the anti-fraud provisions of the Securities Exchange Act of the 1934 have occurred I. The SEC can bring cases against violators II. The SEC cannot bring cases against violators III.Private investors may bring private suits IV. Private investors may not bring private suits

I and III

Which of the following are sub-investment grade credit ratings? I. BB+ II. BBB- III. B1 IV. Baa3

I and III

FINRA rules state that anti-money laundering programs I. are required for all broker-dealers II. are required only for those broker-dealers that hold customer accounts III.include anti-money laundering training for all employees IV. include anti-money laundering training for appropriate personnel

I and IV

Which two of the following are potential sensitive issues that sell-side advisers must navigate in managing an effective due diligence process for their client? I. Sharing of sensitive information with potential competitor bidders II. Sharing audited financials III. Sharing end market information with bidders IV. Preserving sale process confidentiality from employees

I and IV

Which two of the following typically accompany the buyer to the management presentation? I. M&A adviser II. Legal counsel III. Accountants IV. Financing sources

I and IV

The Rule 10b-18 safe harbor applies to open market purchases by an issuer of its own I. Common Stock II. Preferred Stock III.Options

I only

To qualify as a "reporting issuer," which of the following conditions must be met by the issuer? I. It must be subject to the reporting requirements of Section 13 or 15(d) of the '34 Act for at least 90 days prior the sale of a new issue II. It must have registered with the SEC at least 9 months prior to filing of a registration statement III.It must not have a holding period requirement on restricted stock IV. It must have at least 1,000 shareholders

I only

An SEC Rule 165 exemption covers certain written communications made before a registration is filed for a business combination transaction. To qualify for the exemption, such written communications must meet which requirements? I. Be limited to a basic announcement of the offering II. Be included in a prospectus filed on the date of first use III.State that the announcement is not an offer IV. Avoid any mention of offering terms such as amount, time frame or use of proceeds

I, II and III only

A broker-dealer sends a brief letter to a prospective investor. The letter offers a prospectus and states that it may be obtained from the same broker-dealer. This letter will not be considered a prospectus, provided its content is limited to I. identification of the security II. the security's price III.a description of the issuer's business IV. a statement of how orders are executed

I, II and IV only

Which of the following types of communications with the public are permitted during the quiet period? I. Red herring II. Road show presentation III. Tombstone ad

I, II, III

Which of the following events triggers a registrant's obligation to file a Form 8-K? I. Completion of acquisition or disposition of assets II. Costs associated with exit or disposal activities III.Material impairments IV. Creation of a direct financial obligation of a registrant

I, II, III, and IV

FINRA Rule 2269 requires members acting as brokers or dealers to give customers a written notice of interest for which of the following transactions? I. Primary offerings II. Secondary distributions III.Securities in accounts advised for a fee

I, II, and III

Which of the following are acceptable options for delivery of Firm Element education? I. Computer-based training modules prepared by outside vendors II. Face-to-face training delivered by the firm's compliance department to all registered representatives III. Pre-recorded web conferences presented by high level product experts within the firm

I, II, and III

Which of the following are types of negative covenants? I. limitations on investments II. limitations on dividends III.limitations on liens IV. maintaining insurance

I, II, and III only

In a Direct Participation Program, which of the following types of compensation paid to brokers are considered underwriter's compensation?

I. Sales commissions IV. Continuing fees and trail commissions

In an underwriting of corporate securities, the total takedown I. Compensates the selling group II. Compensates syndicate members III.Consists of the underwriting fee and selling concession IV. Is equal to the selling concession

II and III

The rumor list maintained by a broker-dealer I. is required for certain firms as part of Chinese Wall procedures II. is not required for Chinese Wall procedures III. includes securities of an issuer who is the subject of a pending third party deal IV. includes securities of an issuer who is the subject of a damaging product recall

II and III

FINRA regularly releases for publication which of the following information? I. All investigations of firms and representatives that are in response to customer complaints II. The names of representatives that have been fined more than $10,000 III.The names of firms and representatives whose registrations have been suspended, canceled or revoked

II and III only

In a corporate underwriting, discounts from the POP may be available to I. The public II. Syndicate members III. Selling group members

II and III only

Under the Securities Exchange Act of 1934, which of the following statements are true? I. That maximum prison sentence for violation of insider trading rules under the Act is 5 years II. The maximum criminal fine for an individual is $5 million III. The maximum fine for all persons other than individuals is $25 million

II and III only

Which of the following statements regarding preferred stock are TRUE? I. Like common, preferred shares generally have voting rights II. Unlike common, preferred shares generally do not have voting rights III. Preferred shares typically have greater appreciation potential than common IV. Preferred shares typically have less appreciation potential than common

II and IV

A person with a Series 79 registration suspects that a client is engaging in suspicious financial transactions that may violate anti-money laundering regulations. This associated person should I. File a SAR to report the suspicious activity to FinCEN without notifying his supervisor II. Report the suspicious activity to his supervisor III.Report the situation to the local authorities if it involves less than $5,000

II only

An individual that agrees to choose arbitration as a means of dispute settlement

Is bound by the decision of the arbitrator

During a "quiet period," the CEO of the issuer gives an interview to The Wall Street Journal. In this interview, the CEO does not mention the offering but does say that the company's shares are "attractively valued because our earnings will be very strong over the next few quarters." Which of the following is true regarding this comment?

It is a projection that may be considered gun-jumping

Joe is a registered rep currently employed by Windy City Broker-Dealer, a Chicago based firm. Joe recently graduated from college and is working to pay down his student loan debt. In order to get his finances in order in a timely fashion, has parents, who also happen to be clients of the broker-dealer, agree to lend him $50,000. Which of the following is true regarding this action?

Joe can borrow money from his parents provided that the firm has written supervisory procedures addressing the scenario

For an investment banker in an industry group, conversations with which of the following internal colleagues typically requires chaperoned participation from the legal and compliance department?

Managing Director in the equity research group

What is the 10-K filing deadline for a smaller reporting company with a fiscal year that ends on December 31?

March 31

The agreement the governs the relationship between the various underwriters in an SEC offering is known as the

Master Agreement Among Underwriters

The quick ratio is used to measure a company's ability to do which of the following?

Meet its short-term obligations

Which of these indices includes stocks of non-U.S. companies that are traded in the U.S.?

Nasdaq 100

Under Regulation M Rule 101, "actively traded securities" are

Not subject to a restricted trading period (actively traded securities, or those with an ADTV value of at least $1 million where the issuer's common equity securities have a public float value of at least $150 million)

EBIT is often the same as which of the following financial statistics?

Operating income

Over a period of three weeks, an issuer and underwriters discuss and negotiate terms of the offering before a registration statement is filed with the SEC. This period of time is known as the

Pre-filing period

Section 4(a)(5) of the Securities Act of 1933 refers to:

Private placements to accredited investors.

A corporation that elects to pass corporate income and losses to its shareholders is known as a(n)

S Corporation

The contents of the merger proxy are governed in accordance with which of the following?

Schedule 14A

A brokerage firm makes significant changes to certain procedures within its anti-money laundering program. These changes must be approved in writing by

Senior Management of the firm

A trade confirmation is required for transactions in all of the following securities EXCEPT

Series EE bonds (Only U.S. government saving bonds (such as EE bonds) are excluded from the trade confirmation requirements defined in the Securities Exchange Act of 1934)

A public strategic buyer uses all of the following in formulating its bid price for a given target EXCEPT

Stapled financing

Non-interest-bearing U.S. government securities issued with maturities of 1 month, 3 months, 6 months, and 12 months at a discount to face value are known as which of the following?

T-bills

The regulation that addresses potential conflicts of interest when issuers purchase their own stock is

The Securities Exchange Act of 1934

All of the following activities are defined as manipulative or fraudulent EXCEPT

stabilizing

In a Section 363 transaction, the major creditor involved in the takeover is known as the

stalking horse

All of the following statements are true regarding securities that are quoted on the Pink Sheets EXCEPT

The minimum price of stock included in the Pink Sheets is $1.00 per share (no minimum share price)

Which of the following is typically addressed in the indemnification provision of a definitive agreement for a private company seller?

The seller provides indemnity to the buyer for environmental liabilities

The conversion premium on a convertible bond refers to which of the following?

The spread between the market price of the convertible bond and the price at which it can be converted

A board of directors approves a pro rata distribution of securities, so that each existing shareholder of ABC corp. receives 10 shares of a spin-off company. This type of business combination is considered a

Transfer

An issuer who is subject to SEC reporting requirements but is not eligible to use Form S-3 or F-3 for primary offerings is a(n)

Unseasoned issuer

XYZ Co, Inc., an SEC filer in good standing, has a non-affiliate market capitalization of $600 million. XYZ subsequently issues $200 million of non-convertible notes, its first debt issuance in the last three years. On XYZ's website, it states that anytime it raises capital it does so with no immediate business plan or use of the proceeds, except it may use the funds for an acquisition at some point in the future. If XYZ subsequently decides to do a follow-on equity offering, which of the following is TRUE?

XYZ is prohibited from using a free-writing prospectus (because SPACs and Blank Check companies are not allowed to use FWPs)

An underwriter posts a notice on its website that constitutes an offer for an upcoming deal. Is this offer considered to be a prospectus?

Yes, because it falls under the definition of "graphic communication"

Regulation S-K refers to the

standard instructions for filing Forms under Federal Securities laws

Asset Backed Securities could be backed by all of the following EXCEPT

corporate equipment

All of the following statements about FINRA arbitration proceedings are true EXCEPT

customers must agree in writing to settlement of disputes through arbitration (The statute of limitations for an arbitration proceeding is 6 years from the occurrence or event giving rise to the claim)

All of the following collateralize asset-back securities EXCEPT

mortgage payments (those are mortgage-backed securities)

When reviewing the offering documents for a new issue, the FINRA Corporate Financing Department will only permit a new issue to be sold by a member firm if the offering spread is

fair and reasonable

In accordance with NYSE Rule 472 and NASD Rule 2711, equity research analysts may be compensated on the basis of all of the following criteria EXCEPT

involvement in a specific investment banking transaction

Under a tender offer scenario, restricted shares

may be tendered without compliance with Rule 144

An issuer intending to distribute securities under Regulation D

may sell securities without filing a registration statement with the SEC

Under Regulation M, who is responsible for notification to FINRA regarding a restricted period in the distribution of securities?

the managing underwriter

In an underwriting of new securities, the parties to a selected dealer agreement are

the managing underwriter and the selling group members

All of the following are typically found in a proxy statement EXCEPT

the previous voting record of each board member

In arbitration cases for disputes of $50,000 or less

there is one arbitrator who reviews the case without meeting with the parties to render a decision