Unit 7 Q Bank

Six days into the cooling-off period, an issuer receives a deficiency letter from the Securities and Exchange Commission (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) 14 days.

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 days B) 60 days C) 90 days D) 40 days

A) 25 days For new issues that qualify for listing on an exchange or Nasdaq, the prospectus delivery requirement period in the aftermarket is 25 days. If the new issue will be specifically quoted on the Over-the-Counter Bulletin Board or the electronic over-the-counter Pink (thus non-NMS), the period is 90 days. An additional public offering (APO) for a non-NMS security, the requirement for delivery is 40 days. There is no requirement for an APO of an NMS security.

A municipal advisor does which of the following activities? A) Advises municipalities on selling securities B) Advises institutions on selling municipal bonds C) Advises municipalities on buying securities D) Advises institutions on buying municipal bonds

A) Advises municipalities on selling securities

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

A) II and III

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

A) This satisfies the access equals delivery rule for a final prospectus. A prospectus will be deemed to precede or accompany a security for sale if the final prospectus has been filed with the SEC and can be viewed on the SEC website. The access equals delivery model applies to the final prospectus and aftermarket prospectus delivery obligations but not to the preliminary prospectus delivery obligations.

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

A) a red herring may be given to prospective investors.

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

A) be placed by the issuer directly or by the underwriters.

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

A) life insurance.

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

A) the Securities Act of 1933.

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

A) the state level. These are state laws that pertain to the issuance and trading of securities within that state. They are known as blue-sky laws because of a statement made by a Kansas Supreme Court justice who referred to "speculative schemes that have no more basis than so many feet of blue sky."

A corporation needs to build a new manufacturing facility costing several hundred million dollars. In which of the following markets could this new capital be raised? A) Government bond market B) Capital market C) Secondary market D) Municipal bond market

B) Capital market

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 a secondary offering. a primary offering. an additional public offering (APO). an initial primary offering (IPO). A) II and IV B) I and III C) II and III D) I and IV

B) I and III Anytime proceeds are going to the selling shareholders rather than the issuer, it is a secondary offering. Because the company is already public (has shares in the hands of stockholders), this offering of those shares to the investing public would be an APO rather than an IPO.

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

B) I and IV

Which of the following is true regarding the primary market? A) Price is determined by supply and demand. B) Issuer transactions occur in the primary market. C) It is regulated by the Securities Act of 1934. D) The NYSE is an example of a primary market.

B) Issuer transactions occur in the primary market. The primary market is where securities are sold to the investing public through issuer transactions. It is regulated by the Securities Act of 1933. The NYSE is an example of a secondary market where price is determined by supply and demand.

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 1933 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 1934 regulating issues that must be offered by prospectus

B) Securities Act of 1933 regulating issues that must be offered by prospectus

A corporation sells shares to the investing public in order to raise capital. This is known as A) a secondary market transaction. B) an issuer transaction. C) a primary, or investor-to-investor, transaction. D) an exchange market execution.

B) an issuer transaction. The primary market is where securities are sold to the investing public by the issuer wishing to raise capital. These are known as primary market or issuer transactions.

All the following are exempt from the Securities Act of 1933 except A) fixed annuity contracts. B) debt securities issued by religious organization. C) limited partnership. D) U.S. Treasury securities.

B) debt securities issued by religious organization.

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 A) distribute sales literature with the preliminary prospectus. B) give a red herring to prospective investors. C) never publish tombstone advertisements. D) take binding indications of interest received from prospective investors.

B) give a red herring to prospective investors.

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

B) life insurance.

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

B) 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.

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

C) II and IV

Which of the following is true regarding the primary market? A) Price is determined by supply and demand. B) It is regulated by the Securities Act of 1934. C) Issuer transactions occur in the primary market. D) The NYSE is an example of a primary market.

C) Issuer transactions occur in the primary market.

Which of the following would be allowed during the cooling off period? A) Allocating shares to investors B) Distributing a final prospectus C) Placing a tombstone add D) Taking orders

C) Placing a tombstone add

Which of the following statements with regard to the issuance of securities is true? A) The cooling-off period beginning when a registration statement is filed with the Securities and Exchange Commission (SEC) can't last longer than 20 days. B) While the Securities and Exchange Commission (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) The Securities Act of 1933 provides criminal penalties for fraud. D) Once a registration statement has been filed with the Securities and Exchange Commission (SEC) it should be expected that the securities could be sold to the public within two business days.

C) The Securities Act of 1933 provides criminal penalties for fraud.

An officer of a broker-dealer firm would be categorized as a restricted person if that individual attempted to purchase A) a municipal bond in a state where the officer does not reside. B) closed-end funds on the secondary market. C) a new issue initial public offering (IPO) at the public offering price. D) call or put options on a stock in the secondary market.

C) a new issue initial public offering (IPO) at the public offering price. As restricted persons, officers of broker-dealer firms or other institutional investors are prohibited from purchasing a new issue (IPO) at the public offering price.

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

C) a primary offering.

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

C) a primary offering.

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

C) requiring the licensing of persons affiliated with broker-dealers.

Restricted persons are not allowed to purchase an IPO of common stock. All of the following are restricted persons except A) registered representatives. B) broker-dealers. C) the grandparent of a restricted person. D) any person owning 10% or more of a member firm.

C) the grandparent of a restricted person.

Certain investors are deemed accredited when they have a net worth of A) $1 million. B) $200,000. C) $500,000, not including net equity in the primary residence. D) $1 million, not including net equity in the primary residence.

D) $1 million, not including net equity in the primary residence.

Under the de minimis exemption, an initial public offering of common stock may be sold to an account where restricted persons have a beneficial interest as long as their interest in the account does not exceed A) 25%. B) 20%. C) 5%. D) 10%.

D) 10%.

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 A) 40 calendar days after the date the SEC has received it. B) 20 business days after the date the SEC has received it. C) 40 business days after the date the SEC has received it. D) 20 calendar days after the date the SEC has received it

D) 20 calendar days after the date the SEC has received it

Which of the following could not be considered an institutional investor? A) QIB B) Insurance company C) Bank D) An accredited investor

D) An accredited investor

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 initial public offering (IPO). B) a secondary registration. C) a secondary market offering. D) An additional public offering (APO).

D) An additional public offering (APO).

Which type of underwriting is characterized by the broker-dealer buying the entire issue from the issuer and then reoffering it to the public? A) All-or-none B) Best efforts C) Mini max D) Firm commitment

D) Firm commitment

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

D) Municipal note Municipal debt securities, including short-term notes, are exempt from the Securities Act of 1933.

Rules regarding restricted persons state that each of the following is considered immediate family except A) a mother-in-law or a father-in-law. B) parents. C) a brother or a sister. D) an aunt or an uncle.

D) an aunt or an uncle.

A company that offers sales of another company's securities would best be described as A) a transfer agent. B) an issuer. C) a market maker. D) an underwriter.

D) an underwriter.

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

D) corporate securities can only be offered in public securities offerings.

An offering is defined as the sale of a security. Regarding offerings, all of the following are true except A) offerings of stocks can be made to the investing public. B) offerings of bonds 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) corporate securities can only be offered in public securities offerings.