Unit 1 (Quiz 2)
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 shelf registration
Regarding a public offering and a private placement, which of the following statements is false?
Both are subject to the cooling-off period of 20 days found in the Securities Act of 1933.
Your investor is short 300 shares of Seabird Airlines common stock. In order to close this position the investor would enter which of the following orders?
Buy 300 shares of Seabird Airlines
Caleb McCann got a tip from his brother Nate on XYZ stock two months ago. Caleb hasn't previously been investing in the stock market but has been watching this stock since he got the tip from his brother. Caleb is now very bullish on XYZ and wants to place a trade. Which of the following would you recommend?
Buy XYZ to open a long position
Which type of underwriting is characterized by the broker-dealer buying the entire issue from the issuer and then reoffering it to the public?
Firm commitment
Which of the following orders need not be immediately filled in their entirety? Immediate or cancel (IOC) Fill or kill (FOK) Market at open Buy stop limit
Immediate or cancel (IOC) orders allow partial execution, with the unexecuted portion of the order being canceled. Limit orders may be partially filled. A limit order may be filled in pieces until the end of the day (if a day order), or until cancelled (if GTC). Both FOK and market at open orders are expected to be filled immediately and in their entirety. If unable, a FOK order would be canceled (killed).
Under the Securities Act of 1933, which of the following is a nonexempt security?
Shares issued by a U.S. government bond fund
The aftermarket prospectus requirement following an APO for exchange-listed securities is
0 days.
A customer enters the following order: Sell 1,000 shares of XYZ at 23. Which of the following executions would the customer accept?
23.50
Which of the following settlement arrangements has trade and settlement occurring on the same day?
Cash settlement
All the following are exempt from the Securities Act of 1933 except
Limited partnership interests are not exempt securities. The exempt securities include U.S. government securities, municipal bonds, commercial paper and banker's acceptances that have maturities of less than 270 days, insurance policies and fixed annuity contracts (but not variable annuities), charitable, religious, educational, and nonprofit association issues and more.
Which of the following is not an exempt issuer?
National Bank Holding Company
GEMCO Oil and Gas, a non-NMS stock, wishing to sell up to $100 million of convertible debt as market conditions permit, files a shelf registration statement with the SEC. Which of these statements are true? For securities offered via a shelf registration, a supplemental prospectus must be filed with the SEC before each sale. The registration statement is effective upon completion of the cooling-off period. Shelf registration allows the issuer to sell portions of a registered shelf offering over a 2-year period without having to reregister the security. Shelf registration allows the issuer to sell portions of a registered shelf offering over a 4-year period without having to reregister the security.
Section 415 of the Securities Act of 1933 allows publicly traded issuers to register an offering for sale at times to be determined by the issuer. In essence, the issuer is taking the securities off the shelf and selling them when needed; hence the name, shelf offering. No new registration is required for a period of two years, but a supplemental prospectus must be filed with the SEC before each sale. Some issuers, called Well-Known Seasoned Issuers (WKSI), may have a three-year period. This relatively small non-NMS stock is not likely to be a WKSI.
Which of the following is not a requirement for a security to be sold under Rule 147, the intrastate offering rule?
The company receives at least 80% of its revenue from the home state.
A tombstone advertisement would be expected to include all of the following information except
While any inherent risks associated with the issuer or the securities the issuer is offering would be expected to be shown in a prospectus, they would not be expected to be found nor is it required that they be shown in a tombstone advertisement. Each of the remaining answer choices shows information expected to be shown in these ads.
A customer placed an order to purchase 20 GHI Corp. subordinated bonds at 102. The broker-dealer sourced the bonds from another broker-dealer that maintains an inventory of the bonds. The customer's firm acted as
a broker.
Sales for new issues of securities may be solicited
after the cooling-off period.
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.
The price an investor can sell a security is called the
bid
A customer purchased shares of stock into her account. This action is known as
buying long.
Under the Uniform Practice Code, regular-way transactions for common stock settle on
the second business day following the trade date.
Securities regulations that are called blue-sky laws refer to those at
the state level.
Your customer has purchased $10,000 in U. S. Treasury bonds. These securities
will have evidence of ownership recorded in book-entry form.
During the cooling-off period, underwriters may not
During the cooling-off period, underwriters may not distribute sales or advertising literature regarding the securities to be offered. However, they may distribute a preliminary prospectus intended to gather indications of interest and place tombstone ads.
In a prime brokerage account, the prime broker
provides custody and clearing services, as well as margin loans.
ABC currently has the following quotes: Bid Ask Size 10.0010.503 × 2 10.2010.454 × 3 10.2510.603 × 2 What is the inside quote of ABC?
10.25 - 10.45 3 × 3 The inside quote is the highest bid (the highest price someone is willing to buy) paired with the lowest offer, or ask (the lowest price someone is willing to sell). In this case, the most someone was willing to pay was 10.25, and the lowest someone was willing to sell was 10.45.
Which of the following is true if a member firm is acting in both a principal and an agency basis on the same trade?
A BD is both a broker and a dealer, but the BD may not act in both capacities on the same transactions. The best response to this question is that it is not allowed.
