Unit 1 Quiz 1

The SEC has established rules regarding delivery of a prospectus when a secondary market transaction occurs after the effective date. Which of these is correct regarding the rules for initial public offerings (IPOs) and additional public offerings (APOs)?

An APO of a stock listed on the NYSE requires delivery for a period of 25 days.

The aftermarket prospectus requirement for the IPO of nonlisted securities is

90 days

A preliminary prospectus is used to solicit

indications of interest before the effective date.

The Big Shoe Sneaker Company is a small manufacturer of athletic shoes. It is selling $100 million of its stock. This will be its first public offering. It will use the money to enhance both marketing and production with a plan to grow the business and obtain a Nasdaq listing in two or three years. After the initial sale of the new shares, buyers of the stock in the over-the-counter market should expect to receive the final prospectus for how many days?

90

The bid price represents I. the price the broker-dealer is willing to pay when buying a security. II. the price the customer will pay when buying a security. III. the price a customer will receive when selling a security. IV. the price the broker-dealer will receive when buying a security.

II and IV

A corporation sells shares to the investing public in order to raise capital. This is known as

an issuer transaction

Each of the following may be traded on an exchange except

life insurance

The federal law requiring companies offering public equity or debt securities to provide a prospectus to investors is known as

the Securities Act of 1933.

All of the following are exempt issuers under the Securities Act of 1933 except

the State of Montana.

When the Securities and Exchange Commission (SEC) clears securities for sale to the investing public, this is

the effective date.

You quote ABC stock to a customer 67 bid for 1,000 shares, 700 offered at 67.10. Which of the following is true?

the quote's inside spread is 0.10

An opening transaction can be

a sell only

Seacoast Securities is a market maker for JIM common stock. They complete a sale of 300 shares of JIM common to a customer from inventory and charge a modest commission for the transaction. This activity is an example of which of the following?

acting in both a broker and dealer capacity on the same trade

When shares are held in street name, this refers to the shares being

allowed to be sold only on the exchange where they were initially purchased.

A customer placed an order to purchase 100 shares of Sierra Verde Corp. common stock. The broker-dealer sourced the shares from another broker-dealer that maintains an inventory in the stock. The customer's firm acted as

an underwriter

A tombstone advertisement would be expected to include all of the following information except

any inherent risks associated with the offering or the issuer offering the securities.

It is expected that financial markets

have transparent pricing for assets.

Your customer places an order to buy 500 shares of Narcissus, Inc., (the ticker is NCS) at $50 per share fill-or-kill (FOK). When the order is entered, there are 450 shares available at $50 per share. What happens to the order?

the order will be canceled and nothing is done

Regular way settlement for common stock is

trade date

Which of the following would be required for a good 'til canceled order to remain in force for more than six months?

Nothing; it stays on the books until the customer cancels it

ABC currently has the following quotes: What is the inside quote of ABC?

10.25 - 10.45 3 × 3

For a new issue that qualifies for listing on an exchange, a prospectus must be provided to all purchasers for how many days after the effective date?

40 days

An underwriting group is currently assisting an issuer with the preparation and filing of the registration statement for a new issue. Who is responsible for the accuracy of the information within the registration statement?

Issuing corporation

Ensuring that the investing public is fully informed about a security and its issuing company when shares are first sold in the primary market is covered under which of the following federal acts?

Securities Act of 1933

A customer enters an order that must be executed in its entirety when entered or canceled immediately. This is known as

a fill-or-kill (FOK) order

When a firm engages in proprietary trading, buying into and selling out of its own inventory for profit, it is acting as

a market maker

An officer of a broker-dealer firm would be categorized as a restricted person if that individual attempted to purchase

a new issue initial public offer (IPO) at the public price.