New Issues and Primary Market
Which of the following statements regarding a Rule 415 shelf registration is false?
It requires a prospectus to be filed only once.
Which of the following issues are exempt from registration under the Securities Act of 1933?
ABC Corporation commercial paper
Under the Securities Act of 1933, which of the following is a nonexempt security?
Shares issued by a U.S. government bond fund
Which of the following acts requires the registration of most new issues?
The Securities Act of 1933
Which of the following would not be found in a final prospectus?
The list of all investors in the offering
A company is engaging in a securities offering that is a combination of a primary and secondary offering. Which of the following is true?
This combination is known as a split offering where the issuer receives some of the proceeds and existing shareholders receive some of the proceeds from the sale.
An investor is viewing a company's prospectus on the Securities Exchange Commission's (SEC's) website. Which of the following is true?
This satisfies the access equals delivery rule for a final prospectus.
The Securities Act of 1933 requires that all of the following be offered by a prospectus except
Treasury bonds.
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?
Uniform Securities Act
To qualify as an exempt transaction under Tier 2 of Regulation A, an issuer may offer a maximum of which of the following?
Up to $75 million in securities in a 12-month period
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 offering (IPO) at the public offering price.
For initial public offerings (IPOs) of common stock, all of the following would be considered restricted persons except
a person owning at least 5% of the member firm.
A company is looking to raise additional capital to fund an expansion plan. The company's senior management chooses to issue additional bonds to the general public. The best expression to explain this type of offering would be
a primary offering.
A select pair or group of companies organized to underwrite corporate or municipal securities is best known as
a syndicate.
Each of the following provides for an exemption from the registration requirement of the Securities Act of 1933 except
access equals delivery rule.
A small company, in order to raise capital for expansion, wants to sell shares of stock to investors. The company has never offered ownership outside the founding partners to new investors before. This offering is known as
an initial public offering (IPO).
The Mod Family Foundation is a $500,000,000 charitable foundation headed by Clarence Mod. The foundation is seeking to purchase a large block of WeariTech, Inc., a Nasdaq listed company, for the foundation's portfolio. Seacoast Securities is assisting with this secondary market transaction. In this example, the Mod Family Foundation is
an institutional investor.
Modulux, Inc., a NYSE listed manufacturing company, was founded by Clarence Mod. Clarence is now 82 years old and is looking to divest his significant interest in Modulux to capitalize the Mod Family Foundation, a charity. He has enlisted the help of Seacoast Securities, a FINRA member broker-dealer based in Seattle, to run the sale. Seacoast Securities is acting as
an investment banker.
The founder of a large, publicly traded company is looking to sell a very large number of shares of their personal holdings of the company stock. They enlisted the help of Great Plains Investments, LLC, a FINRA member broker-dealer based in Omaha, to run the sale. Great Plains is acting as
an investment banker.
A company that offers sales of another company's securities in a primary market transaction would best be described as
an underwriter.
After the filing of a registration for a new issue with the Securities and Exchange Commission (SEC), and still in the registration's cooling-off period, broker-dealers may
give a red herring to prospective investors.
All of the following are restricted persons except
individual owning 5% of a member firm.
Private placements are primarily sold to
institutional investors
Assets offered and traded in the securities markets can include all of the following except
life insurance.
A preliminary prospectus (red herring)
may be used to gather indications of interest.
Regarding the purchase of a new equity issue, an account where a restricted person has a beneficial interest would be allowed to purchase the new shares at the public offering price
only if the interest does not exceed 10%.
During the cooling off period, underwriters would be allowed to do all of the following except
take orders.
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.
The prospectus delivery requirement, access equals delivery, is satisfied when
the final prospectus has been filed with the Securities and Exchange Commission (SEC) and is available on the SEC's website for investors to see.
Securities regulations that are called blue-sky laws refer to those at
the state level.
Potential risks of owning common stock include all of the following except
unlimited liability.
Regarding the sale of a new issue, a customer is considered a restricted person if the person is
working as a salesperson who works for the issuing firm's underwriter.
Certain investors are deemed accredited when they have a net worth of
$1 million, not including net equity in the primary residence.
The aftermarket prospectus requirement following an APO for exchange-listed securities is
0 days.
After the issuer files a registration statement with the Securities and Exchange Commission (SEC), the time known as the cooling-off period begins. This allows a registration to become effective as early as
20 calendar days after the date the SEC has received it.
For a new issue that qualifies for Nasdaq listing, a prospectus must be provided to all purchasers within how many days after the effective date?
25 days
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 aftermarket prospectus requirement for the IPO of nonlisted securities is
90 days
Which of the following would most closely match the meaning of a red herring?
A preliminary prospectus
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 IPO of a stock to be listed on the NYSE requires delivery for a period of 25 days.
Which of the following choices would best describe a follow-on offering?
An issue of shares by a public company that is already listed on an exchange
Underwriters who are assisting an issuer in bringing securities to the investing public can do which of the following between the time the registration was filed with the Securities and Exchange Commission (SEC) and the effective date?
Distribute a preliminary prospectus to the investing public.
Which of the following would be allowed during the cooling off period?
Distributing a red herring
Which of the following issuers are exempt from the registration requirements of the Securities Act of 1933?
First National Bank
Regulation for a firm that offers advice on securities for a fee on a regular basis is based on which of the following?
Investment Advisers Act of 1940
For the primary market, which of the following is true?
Issuer transactions occur in the primary market, and securities are offered at a public offering price.
The Sierra Verde Coffee Company files a registration statement with the SEC for the sale of new securities. While reviewing the registration statement, the SEC determines that it has not been filed properly and issues a deficiency letter. Sierra Verde submits a corrected registration statement. Which of the following is true regarding the 20-day cooling-off period?
It is halted on the day the deficiency letter is issued and may resume where it left off on the day the corrected registration is received.
An investor requests a preliminary prospectus for a new issue. Regarding the document which of the following is true?
It is made available between the registration date and the effective date.
