Chapter 1 SIPIC
A broker-dealer is the co-manager of a corporation's initial public offering. The quiet period that relates to the issuance of equity research on the offering is: Three calendar days 10 calendar days 25 calendar days 30 calendar days
10 calendar days
What is the maximum allowable percentage that may be sold above the original size of the offering through a Green Shoe option? 10% 15% 20% 25%
15%
Keystone Chocolate Co. plans to sell, only in the state of Pennsylvania, shares of a new issue. In order to qualify for a registration exemption under Rule 147, what percentage of the corporation's assets must be located in Pennsylvania, and what percentage of its revenues must be derived from Pennsylvania sources, at the time of the offering? 70% 80% 90% 100%
80%
A registered representative is permitted to cold call a prospective new client during the hours of: 7:00 a.m. until 8:00 p.m. based on the time of the person making the call 7:00 a.m. until 8:00 p.m. based on the time of the person receiving the call 8:00 a.m. until 9:00 p.m. based on the time of the person making the call 8:00 a.m. until 9:00 p.m. based on the time of the person receiving the call
8:00 a.m. until 9:00 p.m. based on the time of the person receiving the call
Under the Securities Act of 1933, which of the following would MOST LIKELY be included in the definition of an underwriter? An agent A broker-dealer An investment adviser representative An issuer
A broker-dealer
Which of the following choices is an exempt security? Commercial paper with a maturity of 30 days A closed-end investment company Corporate debt with a maturity of 30 years Preferred stock
Commercial paper with a maturity of 30 days
A self-regulatory organization (SRO) would be responsible to: Interpret federal securities law Create rules that allow for disciplining members for improper conduct Create rules that require investors to receive information from issuers of securities Create rules for investment advisers
Create rules that allow for disciplining members for improper conduct
The primary purpose of an exchange is for: Establishing rules and procedures for trading securities Creating a marketplace where short sellers may borrow securities Creating a marketplace that brings buyers and sellers together Establishing a marketplace that lowers transactions costs
Creating a marketplace that brings buyers and sellers together
Senior officers from ZZZ Bedding Products are contemplating taking the company private through a tender offer. The document that would be prepared to protect the officers of ZZZ against charges of lowballing ZZZ's small shareholders is a: Fair value certification Third-party market valuation Good faith opinion Fairness opinion
Fairness opinion
A broker-dealer is underwriting an initial public offering (IPO) for a company that will be listed on the effective date of the offering. The broker-dealer continues to deliver prospectuses Only on purchases made, at the public offering price For 25 days after the deal has closed For 40 days after the deal has closed For 90 days after the deal has closed
For 25 days after the deal has closed
For how long must prospectuses continue to be delivered on an IPO of a company that will not be listed? Only until the deal closes For 25 days in the aftermarket For 40 days in the aftermarket For 90 days in the aftermarket
For 90 days in the aftermarket
A clause in an underwriting agreement that allows an underwriting syndicate to purchase additional shares from the issuer for sale to the public is a(n): Best-efforts clause Green Shoe clause Violation All-or-none clause
Green Shoe clause
The antifraud provisions of the Securities Act of 1933 apply to: I.Brokers II.Broker's brokers III.Dealers IV.Issuers I and II only I and III only II, III, and IV only I, II, III, and IV
I, II, III, and IV
Which of the following statements is NOT TRUE regarding a private placement? There is a limit to the number of nonaccredited investors who may purchase the securities The securities are exempt from registration Solicitation of investors may not be permitted It is usually a very liquid investment
It is usually a very liquid investment
Which of the following statements BEST describes the fairness opinion issued by the financial adviser in a merger? It addresses the primary reasons why the two companies's have agreed to the merger It provides shareholders with a recommendation issued by the financial adviser It provides financial analysis to shareholders regarding the projected performance of the acquiring company It provides a financial perspective and information regarding the payment to be reviewed by shareholders
It provides a financial perspective and information regarding the payment to be reviewed by shareholders
Federal and state registration requirements do NOT apply to which of the following securities? Publicly traded limited partnerships Preferred stock Municipal securities Open-end investment companies
Municipal securities
A charity has received restricted stock from the director of a corporation. The director owned the stock for two years before giving it to the charity. According to SEC Rule 144, the charity may sell the stock: Only if sold to a qualified institutional buyer Freely under Rule 144 After holding the stock for an additional six months, subject to the volume restrictions of Rule 144 After holding the stock for an additional six months, but not subject to the volume restrictions of Rule 144
Only if sold to a qualified institutional buyer
According to SEC rules, a stock that sells for $5 or less, that is not on the Nasdaq system or listed on an exchange, is known as a(n): Restricted security Control stock Penny stock Exempt security
Penny stock
The primary purpose of a self-regulatory organization (SRO) is to: Press civil charges in regard to violations of securities law Press criminal charges in regard to violations of securities law Promote fair and equitable trading practices Insure the solvency of broker-dealers and other market participants
Promote fair and equitable trading practices
ABC Corporation has filed a registration statement with the SEC. A registered representative may: Send a preliminary prospectus to clients to obtain indications of interest Send a research report about ABC to prospective clients Accept orders from clients Accept money from clients to buy the securities
Send a preliminary prospectus to clients to obtain indications of interest
Stock legends on restricted stocks typically require the owner to hold the shares for a minimum of: 30 days 90 days Six months One year
Six months
All of the following information is required to be included in a preliminary prospectus according to the Securities Act of 1933, EXCEPT: A written statement in red on the left border of a preliminary prospectus (red herring) that states that the prospectus may be subject to change The purpose for which the funds are being raised The final offering price The financial status and history of the company
The final offering price
Which of the following transactions does not violate FINRA's New Issue Rule regarding the sale of an equity IPO to a restricted person? A registered representative involved in the distribution sells shares to her brother who she does not support The wife of a registered representative purchases shares from a broker-dealer that does not employ her spouse A registered representative sells shares to an uncle that she supports The mother of a registered representative purchases shares from a broker-dealer that does not employ her child
The mother of a registered representative purchases shares from a broker-dealer that does not employ her child
Which of the following choices makes a financial commitment in the distribution of a new issue of securities? The selling group The underwriting syndicate A customer who provides an indication of interest The exchange on which the security will be listed
The underwriting syndicate
Rule 415 allows shelf registration. This permits one registration statement to cover all securities to be issued during the next: One year Three years Five years Six months
Three years
