SIE Chapter 5

An underwriting syndicate is formed using a western agreement. Firm A has 25% participation of the $100 million issue. Firm A sells $25 million. At the end of the offering, $10 million remains unsold. Firm A's liability for the unsold portion will be:

0

How long must a customer wait after the closing of a syndicate before purchasing the bonds on margin?

30 days

If a major shareholder of a stock trading in the secondary market wishes to sell a large block of their holdings that exceeds restrictions for daily trading volume, which of the following types of distribution would this major shareholder use?

A secondary distribution of securities

Billy works at ABC Broker-Dealer. He hears about an upcoming IPO and really likes the company that is going public. He wants to own the company's stock, so he enters an order to buy 1,000 shares during the IPO in his wife's account, over which he has discretionary authority. Which of the following is TRUE in this scenario?

A violation of SEC regulations on restricted persons has taken place.

Which of the following terms is related to municipal bond underwritings? Negotiated Competitive Bid Stand by Preliminary prospectus

I and II

Investment bankers generally perform which of the following functions? Form and manage syndicates Act as agent in private placement Prepare the registration statements for filing with the SEC Stabilize the price of the issue during distribution

All of the Above

An underwriting in which the issue is canceled unless it can be completely sold is

All or None Agreement

Violations of FINRA rules on new issue offerings occur when underwriters or selling group members do all of the following EXCEPT:

Buy the entire issue and then sell it to the public.

The price of a new issue is determined by which of the following?

Comparison with similar issues on the market. The outlook and attractiveness of the new issue's industry classification. The estimate of the dividends per share the new issue will probably pay. The estimate of the E.P.S. for the new issue shares for the next year.

"Stabilizing Bids" provide what function?

Stabilizing bids take place to avoid or halt a decline in the offering's market price in the secondary market.

In a municipal bond underwriting, who signs the agreement among underwriters?

Syndicate members

According to FINRA Rules, which of the following is NOT considered an "immediate family" member of a registered representative?

The RR's aunt on his mother's side

All of the following are required to be included in a preliminary prospectus according to the 1933 Act EXCEPT:

The final offering price

The main difference between an "underwriting syndicate member" and a "selling group member" in a public offering is the

The financial commitment of the syndicate versus the group member

After carefully reviewing a preliminary prospectus (Red Herring) on an upcoming issue, an investor gives the registered representative an indication of interest for 200 shares. Which two of the following would be true:

The indication may not be filled. Subscription payments are not allowed with the indication

A preliminary prospectus would include which of the following?

The manner in which the proceeds of the issue will be used.

Under the JOBS Act, an issuer that is an emerging growth company or a broker-dealer representing the issuer may engage in the following communications before a registration statement is filed with the SEC

The permitted communications to ascertain investor interest are limited to financially sophisticated investors i.e. QIBs and IAs, not "retail" investors i.e. members of the general public. The permitted communications to ascertain investor interest may be oral or written.

Which of the following is NOT a factor that would affect the amount of an underwriting spread in a securities offering?

The profitabilty of the managing underwriter ARE FACTORS The size of the issue The type of security involved The business history of the issuer

Which of the following is TRUE about stabilizing bids?

They may be placed at or below the offering price.

All of the following are considered immediate family members under FINRA Rules related to the purchase of Initial Equity Public Offerings (IPOs), EXCEPT:

Uncle

When can a registered representative purchase shares of a new issue for his own account?

Under no circumstances

The SEC, in reviewing prospectuses and registration statements,

does not approve securities registered with it and offered for sale.

T/F - The preliminary prospectus includes the offering price of the issue.

false

When do investors purchasing new issues have to receive the final prospectus?

not later than with their purchase confirmation

A company wishing to raise new capital to expand its plant by selling new shares of stock can accomplish this by engaging in a(n)

primary issue

In a corporate underwriting, the difference between the Underwriter's Compensation and the selling concession is known as the:

retention