Unit 1: Chapter 4

Each of the following provides for an exemption from the registration requirement of the Securities Act of 1933 EXCEPT

Access equals delivery rule

Which of the following will NOT be found in a final prospectus?

Agreement among underwriters

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

give a red herring to prospective investors

A prospectus displays which of the following?

Description of how the proceeds will be used

The primary purpose of the Securities Act of 1933 is to

require full and fair disclosure in connection with the sale of securities to the public

Issuance and trading of securities are regulated at more than one governmental level. These would include regulations at which of the following?

III.Federal level IV.State level

Regarding the registration of securities with the Securities Exchange Commission which of the following is TRUE?

Private securities offerings are generally exempt from registration.

The law that provides the legal framework for state registration of securities is the

Uniform Securities Act

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)

Firm commitment

Which of the following prospectus delivery requirements for negotiable securities sold in the secondary markets is NOT accurate?

For an additional issue if the security is non-Nasdaq there is no delivery requirement.

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

14 days

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

20 calendar days after the date the SEC has received it

Which of the following would be considered an isolated nonissuer transaction exempt from state registration under the Uniform Securities Act?

An individual buying stock from another individual without using the services of a registered representative

Under the Uniform Securities Act, registrations must be renewed how frequently?

Annually

Securities sold in an issuer-related transaction would best be described as

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 primary offering

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 private placement

Regarding primary and secondary offerings, which of the following are TRUE?

II.An offering can be a combination of primary and secondary. IV.An APO is a primary offering.

A private securities transaction

II.is exempt from registration under the Act of 1933 III.can be sold to individual accredited investors

Indications of interest taken during the cooling-off period are

II.nonbinding on the issuer and underwriters IV.nonbinding on the investor

During the cooling-off period, underwriters of new securities may

II.not accept orders to purchase shares IV.accept indications of interest regarding potential purchases of shares

During the 20-day cooling-off period,

II.solicitations of sales may not be made III.deficiency letters, if issued, are sent to the issuer

Which of the following best describes a final prospectus?

Meets the full and fair disclosure requirements of the Securities Act of 1933

Which of the following would NOT be expected to be found in a tombstone advertisement for a new issue?

The intended purpose for which to use the sales proceeds

Notice filing for securities at the state level is for

securities that are deemed to be federally covered only

A method of registering securities at the state level that is reserved only for federal covered securities is known as

notice filing

State registration is not required if the transaction is exempt. An example of an exempt transaction would be

one that is unsolicited

The Securities Act of 1933 requires that

registration with the Securities and Exchange Commission (SEC) before public sale can be made be an option for all new issues

The Securities Act of 1933 protects investors who buy new issues by doing all of the following EXCEPT

requiring the licensing of persons affiliated with broker-dealers

All of the following are true of tombstone advertisements EXCEPT

they are mandatory and must be placed during the cooling-off period

When the Securities and Exchange Commission clears securities for sale to the investing public, this is

the effective date

The access equals delivery rule applies to

the final prospectus and aftermarket delivery obligations

The prospectus delivery requirement, access equals delivery, is satisfied when

the final prospectus has been filed with the SEC and is available on the SEC's website for investors to see

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

Which of the following would most closely match the meaning of a "red herring"?

A preliminary prospectus

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. IV.Portions of a shelf offering can be sold over a 3-year period without having to reregister the security.

Regarding the purchase of new equity issues by restricted persons, which statements are TRUE?

I.An investment club is permitted to buy a new equity issue at the offering price. IV.An investment club that has twelve members with equal ownership, one of which is a registered representative, is permitted to buy a new equity issue at the offering price.

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

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.

Which of the following securities is exempt from the Securities Act of 1933

Municipal note

For nonexempt securities being offered to the public for the first time by a corporate issuer, which of the following would be applicable?

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

If an officer of a bank with the authority to purchase and sell securities on behalf of the bank wants to purchase new issues, which of the following statements is TRUE?

The officer may not purchase a new issue because he is considered a restricted person.

Regarding primary offerings, which of the following is TRUE?

There is no limit to the number of primary offerings a corporation can issue.

An investor is viewing a company's prospectus on the Securities Exchange Commission's website. Which of the following is TRUE?

This satisfies the access equals delivery rule for a final prospectus.

Sales for new issues of securities may be solicited

after the cooling-off period

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

an APO

An indication of interest given by an investor during the cooling-off period is

an investor's declaration of potential interest in purchasing some of the issue after the security comes out of registration

A tombstone advertisement would be expected to include all of the following information EXCEPT

any inherent risks associated with the offering or the issuer offering the securities

Tombstone ads

are permitted before the effective date

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

never exceed the number of shares authorized

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

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

mini-max

When an investor receives a final prospectus, the expectation should be that one of the following would not be found. Which is it?

the SEC's verification of accuracy

Public offerings of securities are regulated under

the Securities Act of 1933

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

Regarding the registration statement filed with the SEC when new securities are to be issued, all of the following are true EXCEPT

the accuracy and adequacy of the registration documents is the responsibility of the underwriters

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)

All-or-none

Which of the following best describes a prospectus?

It is a full and fair disclosure of all material information and facts regarding the issuance of securities.

The Securities Act of 1933 requires that all of the following be offered by a prospectus EXCEPT:

Treasury bonds.

A tombstone advertisement placed before the effective date

can be placed by the issuer directly or by the underwriters