UNIT 20 PRACTICE QUESTIONS 5

An underwriter in an Eastern syndicate has a 15% participation. The underwriting is for $20 million, and the underwriter has sold its $3 million allotment. The underwriting closes with $1 million remaining unsold. This underwriter's liability is

$150000 15% of $1mill

A dealer that quotes a concession of half to another dealer means

$5 per $1,000 of par.

One of your clients saw an advertisement for a new offering. The fine print stated that this was available solely to accredited investors. You would explain that this is a private placement being offered under the exemption provided in SEC Rule

506c

If a syndicate is formed under a Western account arrangement, what is the treatment of any unsold securities?

Each member is responsible for its unsold securities.

A new issue of bonds is offered to the public at a price of 100¾. What is the most likely reason for the issue being priced at a premium?

Market interest rates have gone down since the underwriting commitment was signed.

Which of the following statements regarding a Rule 144 sale of restricted stock are true? Stock sold through a 144 sale is considered registered stock after the sale. After holding the stock for six months, nonaffiliates may sell unrestricted. After holding the stock for six months, there are no volume restrictions for affiliates. Form 144 must be filed with the SEC at least 10 business days before a 144 sale made by an affiliate.

Stock sold through a 144 sale is considered registered stock after the sale. After holding the stock for six months, nonaffiliates may sell unrestricted.

Shortly before the end of the cooling-off period, the underwriters and representatives of the issuer have a meeting to review the status of the new issue. This is called

a due diligence meeting.

In compliance with the Securities Act of 1933, a prospectus is always required when selling interests in

a unit investment trust.

All of the following securities are exempt from the registration provisions of the Securities Act of 1933 except A) national and state bank securities. B) state and municipal bonds. C) commercial bank holding company securities. D) commercial paper and bankers' acceptances that have maturities of no more than 270 days.

commercial bank holding company securities

The antifraud provisions of the Securities Exchange Act of 1934 apply to all of the following except

commodities

The terms of municipal general obligation (GO) and revenue bond offerings may be set by the issuer as

either competitive bid or negotiated underwritings.

An intrastate offering is exempt from

federal registration

A provision permitting the syndicate members participating in a firm commitment offering to engage in short selling on an IPO is

green shoe option

When an existing, long established publicly traded corporation issues a large block of new shares in order to expand or modernize, it is

primary distribution

In the underwriting of a new municipal GO bond issue, who would earn the selling concession?

selling group member

Under Rule 506(c) of Regulation D, advertising is permitted when

the issue is limited to accredited investors.

A registered primary offering of common stock differs from a registered secondary offering of common stock in that

the proceeds of the primary offering are received by the issuing company, while the issuer receives none of the funds from a secondary offering.

Better Bond Sales (BBS) is the syndicate manager of new GO municipal bond issue. Should BBS sell some of the bonds, its earnings would be

the spread