Knowledge of Capital Markets - Offerings

The Uniform Securities Act (USA) provides a legal framework for the registration of A)securities at the state level B)mutual funds at the federal level C)foreign securities traded abroad D)variable annuities at both state and federal levels

A

The Securities Act of 1933 requires that all of the following be offered by a prospectus EXCEPT: A)Treasury bonds. B)Variable annuities. C)Mutual fund shares. D)Unit investment trusts.

A

After the issuer files a registration statement with the SEC, the time known as the cooling-off period begins. This allows a registration to become effective as early as A)40 business days after the date the SEC has received it B)20 calendar days after the date the SEC has received it C)40 calendar days after the date the SEC has received it D)20 business days after the date the SEC has received it

B

A company is already public with several major stockholders. Sale proceeds for shares being sold to the investing public will go to some of the existing stockholders who want to divest of their shares. This is I.a secondary offering II.a primary offering III.an additional public offering IV.an initial primary offering A)I and III B)II and III C)II and IV D)I and IV

A

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(n) A)primary offering B)initial public offering C)secondary offering D)private securities offering

A

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? A)issuing corporation B)lead underwriter C)underwriting group D)both the underwriters and the issuing corporation

A

Assets offered and traded in the securities markets can include all of the following EXCEPT A)life insurance B)derivative products C)currencies D)equities

A

During the cooling-off period, underwriters may NOT A)distribute sales literature or advertising material B)take indications of interest C)place a tombstone advertisement D)distribute a preliminary prospectus

A

During the cooling-off period, underwriters of new securities may I.accept orders to purchase shares II.not accept orders to purchase shares III.not accept indications of interest regarding potential purchases of shares IV.accept indications of interest regarding potential purchases of shares A)II and IV B)I and IV C)II and III D)I and III

A

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? A)25 B)40 C)60 D)90

A

Six days into the cooling-off period, an issuer receives a deficiency letter from the SEC requesting clarification and corrections. Once the issuer submits these, and assuming that they satisfy the deficiency, the cooling-off period will resume. With no other deficiencies arising, the issue should become effective in A)14 days B)20 days C)8 days D)15 days

A

A corporate issuer of common stock has decided that it wants an agreement that its underwriter must either raise all of the capital needed or cancel the underwriting. To best accommodate this the underwriting should be a(n) A)All-or-none B)Firm commitment C)Immediate of cancel D)Mini-max

A

All the following are exempt from the Securities Act of 1933 EXCEPT: A)Limited partnership B)Fixed annuity contracts C)Debt securities issued by religious organization D)U.S. Treasury securities

A

The requirement for a supplemental prospectus to be filed before each sale is applicable to A)shelf registration sales B)initial public offering sales C)sales of shares in the secondary market D)additional issues

A

The statement "These securities have not been approved or disapproved nor have any representations been made about the accuracy or the adequacy of the information" is A)mandated to be in the final prospectus by the SEC B)placed by the issuer in the preliminary prospectus C)mandated by FINRA to be placed in both the preliminary and final prospectus D)is the disclaimer placed by the underwriters in a tombstone advertisement

A

Which of the following will NOT be found in a final prospectus? A)Agreement among underwriters B)Business plan and use of the proceeds C)Statement that the SEC neither approves nor disapproves of the issue D)Effective date and offering price

A

When choosing to issue additional bonds to the general public in order to raise more capital, a corporate issuer is engaging in A)a primary offering B)a secondary offering C)a private securities offering D)an initial public offering

A

A company is considering raising capital without going through the registration process requirements mandated by the Securities Act of 1933. To be exempt from the Act, which of the following offerings might they employ? A)Additional public offering B)Private (nonpublic) securities offering C)Shelf offering D)Initial public offering

B

An offering in which one or more stockholders in the corporation are selling all or a portion of their own shares to the investing public for the first time is known as A)a primary offering B)a secondary offering C)an initial public offering D)a subsequent offering

B

Securities regulations that are called blue-sky laws refer to those at A)neither the state nor the federal level B)the state level C)the federal level D)both the state and the federal level

B

State registration is not required if the transaction is exempt. An example of an exempt transaction would be A)one involving U.S. government bonds B)one that is unsolicited C)one involving municipal bonds D)one that is solicited

B

The Securities Act of 1933 requires that A)both exempt and nonexempt new issues be registered with the Securities and Exchange Commission (SEC) before public sale B)a new issue, unless specifically exempted from the Act, be registered with the Securities and Exchange Commission (SEC) before public sale C)all new issues be exempted from registration with the Securities and Exchange Commission (SEC) so that they may be sold to the public D)registration with the Securities and Exchange Commission (SEC) before public sale can be made be an option for all new issues

B

Underwriters acting as principals and committing to purchase any unsold shares for the syndicate account would BEST be described as being engaged in a(n) A)Best efforts B)Firm commitment C)Initial public offering D)Primary

B

A company's management team has agreed to issue additional shares of common stock in part to provide an employee stock ownership plan. It is agreed the issuance of the stock is not urgent and can wait until more favorable market conditions exist. What type of registration is most suitable under these conditions? A)An "ESOP" registration B)A "shadow" registration C)A "shelf" registration D)An "expansion" registration

C

A preliminary prospectus is used to solicit A)sales before the effective date B)indications of interest before the registration filing date C)indications of interest before the effective date D)sales after the effective date

C

Which of the following calls for the underwriters to buy securities from the issuer acting as an agent, not as principal? A)Firm commitment underwriting B)Follow-on offering C)Best efforts underwriting D)Initial public offering

C

Which of the following would most closely match the meaning of a "red herring"? A)Prospectus B)A tombstone advertisement C)A preliminary prospectus D)A registration statement

C

Which of the following offerings is most likely exempt from the registration requirements of the Securities Act of 1933? A)Additional public offerings B)Shelf offerings C)Initial public offerings D)Private (nonpublic) securities offerings

D

Which of the following securities is exempt from the Securities Act of 1933 A)Debenture B)Preferred stock C)Common stock D)Municipal note

D

A provision for filing securities at the state level used solely for securities that are considered to be federal covered securities is known as A)qualification B)coordination C)notice filing D)registration

C

A prospectus displays which of the following? A)Performance predictions for a minimum of three years B)Description of how the proceeds will be used C)A guarantee insuring against loss D)The SEC endorsement

B

Private placements are primarily sold to A)individuals who meet the definition of accredited investor B)institutional investors C)investment bankers D)general public investors

B

Each of the following may be traded on an exchange EXCEPT A)bonds B)options C)life insurance D)equities

C

For nonlisted and non-Nasdaq securities, a prospectus must be provided to all those who purchase securities for how many days after the effective date? A)40 B)10 C)30 D)60

A

A corporation increases capitalization by selling shares of stock which can either come from a new issue or previously authorized but unissued shares. Total stock outstanding must A)never equal the number of shares issued B)always be greater than the number of shares issued C)never exceed the number of shares authorized D)always equal the number shares authorized

C

Under the Uniform Securities Act, registrations must be renewed how frequently? A)Biannually B)Semiannually C)Annually D)Quarterly

C

An investor requests a preliminary prospectus for a new issue. Regarding the document which of the following is TRUE? A)The final price for the securities is published within it. B)Receipt of it is a commitment that the underwriters will sell securities to the recipient. C)It can be deemed an offer to sell securities to the public. D)It is made available between the registration date and the effective date.

D

An offering is defined as the sale of a security. Regarding offerings, all of the following are true EXCEPT A)offerings of bonds can be made to the investing public B)offerings of stocks can be made to the investing public C)offerings can be identified by who is selling the securities issuer or investor D)corporate securities can only be offered in public securities offerings

D

For nonexempt securities being offered to the public for the first time by a corporate issuer, which of the following would be applicable? A)Securities Act of 1933 regulating securities traded in the secondary market B)Securities Act of 1934 regulating issues that must be offered by prospectus C)Securities Act of 1934 regulating securities that must be offered by prospectus D)Securities Act of 1933 regulating issues that must be offered by prospectus

D

Regarding the issuance of new securities to the public, which of the following is TRUE? A)Underwriters are permitted to accept orders for securities during the SEC review period. B)Registrations become effective within 10 business days of SEC filing. C)The SEC review of a new issues filing must always be longer than 20 days. D)The Securities Act of 1933 provides criminal penalties for fraud.

D

An official statement is a disclosure document that would be used in connection with an offering of which of the following securities? A)Limited partnership interests B)Municipal bonds C)Common of preferred stock offered privately D)U.S. Treasury notes

B

Each of the following provides for an exemption from the registration requirement of the Securities Act of 1933 EXCEPT A)Regulation D B)Access equals delivery rule C)Rule 147 D)Regulation A

B

Notice filing for securities at the state level is for A)secondary offerings of equity securities only B)securities that are deemed to be federally covered only C)securities being issued in an initial public offering only D)secondary offerings of debt securities only

B

Public offerings of securities are regulated under A)the Consumer Protection Act B)the Securities Act of 1933 C)FINRA's communications with the public rules D)the Securities Act of 1934

B

Regarding primary and secondary offerings, which of the following are TRUE? I.An offering can only be either a primary or secondary. II.An offering can be a combination of primary and secondary. III.An IPO is a secondary offering. IV.An APO is a primary offering. A)II and III B)II and IV C)I and IV D)I and III

B

A tombstone advertisement placed before the effective date A)can only be placed by those assisting the issuing company in the underwriting B)can be placed by the issuer directly or by the underwriters C)can always be deemed to be an offer to sell the securities D)can only be placed by the issuing company

B

Under the Uniform Securities Act (USA), state laws require that registered representatives must register in a state in which of the following circumstances? I.The registered representative is a resident of the state. II.The registered representative solicits business in the state. III.The registered representative vacations in a state more than twice per year. IV.The registered representative owns rental property in a state. A)II and IV B)I and III C)I and II D)II and III

C

In an underwriting where fixing a minimum dollar amount to be sold in order to move forward with the entire offering is most commonly referred to as A)de minimis B)all-or-none C)mini-max D)firm commitment

C

Indications of interest taken during the cooling-off period are I.binding on the selling issuer and underwriters II.nonbinding on the issuer and underwriters III.binding on the investor IV.nonbinding on the investor A)II and III B)I and IV C)II and IV D)I and III

C

Issuance and trading of securities are regulated at more than one governmental level. These would include regulations at which of the following? I.County level II.City level III.Federal level IV.State level A)II and III B)I and IV C)III and IV D)I and II

C

Regarding registration for the sale of securities, those registered under the Investment Company Act of 1940, such as mutual funds, would be considered A)securities that are exempt from registration at all levels B)federal covered securities required to register at the state level only C)federal covered securities and not required to register at the state level D)securities required to register at both the federal and the state level

C

The prospectus delivery requirement, access equals delivery, is satisfied when A)the final prospectus has been filed with FINRA and is available on FINRA's website for investors to see B)the preliminary prospectus has been filed with FINRA and is therefore available on FINRA's website for investors to see C)the final prospectus has been filed with the SEC and is available on the SEC's website for investors to see D)a red herring is initially sent by mail to investors during the cooling-off period

C

Tombstone ads A)are offers to sell securities to the public B)are disclosures detailing all the information shown in a prospectus C)are permitted before the effective date D)must be placed in all new offerings

C

Under the Uniform Securities Act, states have which of the following 2 ways to register securities to be sold? I.Preparation II.Integration III.Coordination IV.Qualification A)II and III B)I and IV C)III and IV D)I and II

C

Regarding primary offerings, which of the following is TRUE? A)A corporation can have only one primary offering—the initial public offering (IPO). B)A corporation can have two primary offerings—the initial public offering (IPO) and an additional public offering (APO). C)After its initial public offering (IPO), a corporation can have only one more primary offering—its subsequent primary offering (SPO). D)There is no limit to the number of primary offerings a corporation can issue.

D

Sales for new issues of securities may be solicited A)before the cooling-off period B)before, during, or after the cooling-off period, if done with a final prospectus C)during the cooling-off period D)after the cooling-off period

D

Shelf offerings are covered under which if the following? A)The Bank Secrecy Act B)The Trust Indenture Act of 1939 C)The Investment Company Act of 1940 D)The Securities Act of 1933

D

The federal law requiring companies offering public equity or debt securities to provide a prospectus to investors is known as A)the Securities Investors Protection Act of 1970 B)the Trust Indenture Act of 1939 C)the Securities Exchange Act of 1934 D)the Securities Act of 1933

D

A company with previously issued shares outstanding wants to issue more shares to the public. These new shares are issued in what is known as A)an APO B)an IPO C)a secondary registration D)a secondary market offering

A

A company's board of directors has agreed that the company should be prepared to have shares of common stock ready to be issued that are intended to be distributed in the form of a one-time employee bonus. Not knowing exactly when the one-time bonus plan will be implemented and the shares will be needed, the type of registration or offering that would best suit the scenario is A)a "shelf" registration B)a "shadow" registration C)a "bonus" share plan D)an "ESOP" registration

A

A method of registering securities at the state level that is reserved only for federal covered securities is known as A)notice filing B)federal covered application C)coordination D)qualification

A

An indication of interest given by an investor during the cooling-off period is A)an investor's declaration of potential interest in purchasing some of the issue after the security comes out of registration B)an investor's declaration of potential interest in purchasing some of the issue immediately C)an investor's binding commitment to purchase some of the issue immediately D)an investor's binding commitment to purchase some of the issue after the security comes out of registration

A

An underwriter is placing a tombstone advertisement for a company's new issue. A prospective investor might expect to see all of the following information on the advertisement EXCEPT A)the names of the company's officers B)the number of shares to be sold C)the type of security to be sold (stock or bond) D)the names of the underwriting members

A

During the cooling-off period of a new registration filed with the SEC A)a red herring may be given to prospective investors B)tombstone advertisements may not be published C)sales literature may be distributed with the preliminary prospectus D)indications of interest received are binding on the broker-dealers

A

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? A)Securities Act of 1933 B)Uniform Securities Act C)Securities Exchange Act of 1934 D)Investment Company Act of 1940

A

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? A)25 B)40 C)60 D)90

A

If it finds that the registration statement needs revision, expansion, or to have corrections made, the SEC may suspend the review of the new issue and issue a deficiency letter. Once the issuer submits a corrected registration statement, the 20-day cooling-off period A)resumes where it had left off B)begins anew C)considered over allowing the registration to be effective D)is increased by 10 business days to accommodate review of the new information

A

Regarding a shelf registration filed with the SEC, which of the following statements are TRUE? I.A supplemental prospectus must be filed before each sale. II.This registration is for issuers who want to issue securities for the first time. III.Portions of a shelf offering can be sold over a 10-year period without having to reregister the security. IV.Portions of a shelf offering can be sold over a 3-year period without having to reregister the security. A)I and IV B)II and IV C)II and III D)I and III

A

Restricted persons are not allowed to purchase an IPO of common stock. All of the following are restricted persons EXCEPT A)The grandparent of a restricted person B)Any person owning 10% or more of a member firm C)Registered representatives D)Broker-dealers

A

Securities sold in an issuer-related transaction would best be described as A)a primary offering B)a balance of payments C)a split offering D)a secondary offering

A

The ATOP Company is planning to offer shares of both common and preferred stock to the investing public in order to raise operating capital intended to be used for expansion. Which of the following laws enacted by Congress would be the most relevant when issuing these equity securities to the public? A)The Securities Act of 1933 B)The Securities Investors Protection Act of 1970 C)The Trust Indenture Act of 1939 D)The Investment Company Act of 1940

A

The Securities Act of 1933 protects investors who buy new issues by doing all of the following EXCEPT A)requiring the licensing of persons affiliated with broker-dealers B)providing criminal penalties for fraud in the issuance of new securities C)regulating the underwriting and distribution of primary and secondary issues D)requiring an issuer to provide full and fair disclosure

A

The XYZ Company is looking to offer shares of its common stock to the public. Which of the following laws enacted by Congress would have the most relevance to the issuance of these securities? A)The Securities Act of 1933 B)The Investment Company Act of 1940 C)The Securities Investors Protection Act of 1970 D)The Trust Indenture Act of 1939

A

Which of the following are methods of registering securities within a state? I.Registration by coordination II.Registration by qualification III.Registration by notification IV.Registration by application A)I and II B)III and IV C)II and III D)I and IV

A

Which of the following statements with regard to the issuance of securities is TRUE? A)The Securities Act of 1933 provides criminal penalties for fraud B)While the SEC is reviewing a registration statement for a new offering of securities, the underwriters are permitted to solicit and accept orders for the securities from the public. C)Once a registration statement has been filed with the SEC it should be expected that the securities could be sold to the public within 2 business days D)The cooling-off period beginning when a registration statement is filed with the SEC, can't last longer than 20 days.

A

A tombstone advertisement would be expected to include all of the following information EXCEPT A)the name of the issuer and underwriters if they are being used to assist in the offering B)any inherent risks associated with the offering or the issuer offering the securities C)the price or price range at which the securities are expected to be offered D)an advisory that the advertisement is neither an offer to sell nor a solicitation of an offer for any of these securities

B

Regarding the purchase of new equity issues (IPOs), restricted persons may A)purchase shares of a new issue only if they work for a bank B)not purchase shares of a new issue C)purchase shares of a new issue only in amounts that are not substantial in relation to the total number of shares being issued D)purchase shares of a new issue only if they are employed by a broker-dealer as a registered representative

B

Regarding the registration of securities with the Securities Exchange Commission which of the following is TRUE? A)Public securities offerings are generally exempt from registration. B)Private securities offerings are generally exempt from registration. C)All securities offerings, public or private are exempt from registration D)No securities offering can ever be exempt from registration.

B

Regarding the registration statement filed with the SEC when new securities are to be issued, all of the following are true EXCEPT A)a description of how the proceeds raised from the sale will be used must be disclosed B)the accuracy and adequacy of the registration documents is the responsibility of the underwriters C)underwriters may assist the issuer in preparing and filing the registration statement D)the names and addresses of company officers and directors, their salaries, and a 5-year business history of each must be shown

B

The access equals delivery rule applies to A)all prospectuses delivered before the registration date B)the final prospectus and aftermarket delivery obligations C)the final prospectus delivery requirements during the cooling-off period D)the preliminary prospectus delivery requirements during the cooling-off period

B

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 SEC and the effective date? A)Make a binding offer to sell the securities B)Distribute a preliminary prospectus to the investing public C)Mail sales literature to those who have expressed an interest in purchasing the securities D)Solicit orders from investors to purchase the securities

B

When an investor receives a final prospectus, the expectation should be that one of the following would not be found. Which is it? A)the intended use of the proceeds raised in the offering B)the SEC's verification of accuracy C)the effective or offering date D)all known risks to purchasers of the stock

B

When the Securities and Exchange Commission clears securities for sale to the investing public, this is A)the due date B)the effective date C)the time upon which the SEC approves the securities D)the ex-date

B

Which of the following best describes a final prospectus? A)Filed with the SEC but is never made available to the general public B)Meets the full and fair disclosure requirements of the Securities Act of 1933 C)Used to solicit indications of interest in a new issue during the cooling-off period D)Must be refiled with the SEC on an annual basis

B

An issuer that is already a publically traded company wants to register new securities without selling any of the shares until later when it anticipates it will be retooling all of its existing manufacturing plants. Which of the following applies? A)This can be accomplished by utilizing an additional issue offering, which is specifically for publically traded companies wanting to register new shares to be issued later. B)This cannot be done because newly registered securities must be made available for sale immediately. C)This can be accomplished by utilizing a shelf registration specifically designed to register shares presently to be sold later. D)This can be accomplished by utilizing a new initial public offering, which is necessary for registration of all new shares.

C

When an issuing company sells securities to primarily institutional investors and a small number of wealthy individuals, as opposed to the general investing public in an exempt offering, this is known as A)a primary placement B)a secondary placement C)a private placement D)a secondary offering

C

Which of the following would NOT be expected to be found in a tombstone advertisement for a new issue? A)The name of the issuer or those of the underwriters B)The number of shares to be offered C)The intended purpose for which to use the sales proceeds D)The type of security to be offered (equity or debt)

C

Which of the following would be applicable to non-exempt securities (those that must be registered) being offered to the public by a corporate issuer? I.Securities Act of 1933 II.Prospectus III.Securities Act of 1934 IV.Secondary market A)III and IV B)II and IV C)I and II D)II and III

C

A new registered representative receives a memo discussing the distribution of a "red herring." The RR knows that the memo is referencing A)a registration statement B)a final prospectus C)a tombstone advertisement D)a preliminary prospectus

D

A preliminary prospectus (red herring) A)if requested by an investor serves as a binding order to purchase shares B)will show the final offering price C)may not be distributed during the cooling-off period D)may be used to gather indications of interest

D

A private securities transaction I.is nonexempt and must be register under the Act of 1933 II.is exempt from registration under the Act of 1933 III.can be sold to individual accredited investors IV.can be sold to institutional investors only A)II and IV B)I and IV C)I and III D)II and III

D

A select pair or group of companies organized to underwrite corporate or municipal securities is BEST known as a(n) A)introducing broker-dealer B)market maker C)investment club D)syndicate

D

After the filing of a registration for a new issue with the SEC, and still in the registration's cooling-off period, broker-dealers may A)distribute sales literature with the preliminary prospectus B)never publish tombstone advertisements C)take binding indications of interest received from prospective investors D)give a red herring to prospective investors

D

All of the following are true of tombstone advertisements EXCEPT A)they can be placed by the underwriters B)they would be expected to show the number of shares to be offered C)they are not an offer to sell or solicit sales for the securities D)they are mandatory and must be placed during the cooling-off period

D

An investor is viewing a company's prospectus on the Securities Exchange Commission's website. Which of the following is TRUE? A)This does not satisfy the access equals delivery rule for an aftermarket prospectus. B)Access equals delivery can only mean physical delivery of the prospectus and not viewing one on a website. C)This satisfies the access equals delivery rule for a preliminary prospectus. D)This satisfies the access equals delivery rule for a final prospectus.

D

During the 20-day cooling-off period, I.solicitations of sales can be made II.solicitations of sales may not be made III.deficiency letters, if issued, are sent to the issuer IV.deficiency letters, if issued, are sent to the underwriters A)II and IV B)I and IV C)I and III D)II and III

D

The law that provides the legal framework for state registration of securities is the A)Securities Exchange Act of 1934 B)Trust Indenture Act of 1939 C)Securities Act of 1933 D)Uniform Securities Act

D

The primary purpose of the Securities Act of 1933 is to A)regulate all persons associated with industry member firms B)provide a basis for the regulation of exchanges and electronic trading venues C)authorize the designated self-regulatory organizations (SROs) to enforce securities rules and regulations D)require full and fair disclosure in connection with the sale of securities to the public

D

Which of the following best describes a prospectus? A)It is a useful but not mandatory document showing detailed information intended to offer investors adequate reason to purchase shares. B)It is a document, required by securities law, which offers limited information about an issuer's securities to be offered to the public. C)It is a truth-in-lending document required whenever a loan is made to an issuer via the purchase of its debt securities. D)It is a full and fair disclosure of all material information and facts regarding the issuance of securities.

D

Which of the following choices would BEST describe a "follow-on" offering? A)An offering to the employees of the issuing company B)The common stock that is issued attached to a "rights" offering C)An IPO that has additional shares added by the issuer on the effective date D)An issue of shares by a public company that is already listed on an exchange

D

Which of the following prospectus delivery requirements for negotiable securities sold in the secondary markets is NOT accurate? A)For an IPO if non-Nasdaq the delivery requirement is 90 days. B)For an IPO if listed on an exchange or Nasdaq the delivery requirement is 25 days. C)For an additional issue listed on an exchange or Nasdaq there is no delivery requirement. D)For an additional issue if the security is non-Nasdaq there is no delivery requirement.

D

Which of the following would be considered an isolated nonissuer transaction exempt from state registration under the Uniform Securities Act? A)A registered representative assisting a customer in redeeming shares of a limited partnership B)A customer requesting shares of an IPO C)A customer purchasing shares of a stock in the OTC market D)An individual buying stock from another individual without using the services of a registered representative

D