Unit 1 - REVIEW #1
The current quote for Generic Motors stock is bid 32-ask 32.05 5 × 2. Your customer places an order to sell 300 shares. How much will they likely receive, before commission?
$9,600 (Reasoning: Your customer will sell at the bid (32), or likely very close to it. The bid size is 500 shares so the market can absorb the entire order. 32 × 300 = $9,600. Customers who are selling receive the bid. Those who are buying pay the ask. The size shows bid × ask; 500 shares may be sold at 32 and 200 shares are available to buy at 32.05.)
For Nasdaq or exchange listed security the prospectus delivery requirement period in the aftermarket is
25 days for an IPO (0 days for an APO)
For nonlisted and non-Nasdaq securities, a prospectus must be provided to all those who purchase securities as part of an APO for how many days after the effective date?
40 days
For nonlisted and non-Nasdaq securities, the prospectus delivery requirement period in the aftermarket is
40 days (90 days for an IPO)
To fill a customer buy order over the counter, your broker-dealer requests a quote from a market maker for 600 shares. The response is 20 bid, and ask 20.15. If the order is placed, the market maker must sell
600 shares at $20.15 per share
Which of the following calls for the underwriters to buy securities from the issuer acting as an agent, not as principal?
Best efforts underwriting
The price an investor can sell a security is called the
Bid
Your customer purchased 300 shares of XYZ stocks six months ago and sold the shares last week. The actions your customer took in relation to XYZ were to
Buy long and sell long
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 & Shelf registration allows the issuer to sell portions of a registered shelf offering over a 2 year period without have to reregister
Which of the following would take place in the primary market?
Securities sold to the public by the issuer
Your client, Jane Anderson, has owned QRS for a few years but has now turned bearish on QRS. What transaction would you recommend?
Sell QRS to close (Bearish = down)
Which of the following offerings is most likely exempt from the registration requirements of the Securities Act of 1933?
Private (nonpublic) securities offerings
For initial public offerings (IPOs) of common stock, which of the following would be considered restricted persons?
a member firm
A tombstone advertisement would be expected to include all of the following information except A) an advisory that the advertisement is neither an offer to sell nor a solicitation of an offer for any of these securities. B) the price or price range at which the securities are expected to be offered. C) any inherent risks associated with the offering or the issuer offering the securities. D) the name of the issuer and underwriters if they are being used to assist in the offering.
any inherent risks associated with the offering or the issuer offering the securities.
A tombstone advertisement placed before the effective date can
be placed by the issuer directly or by the underwriters
All of the following are market centers within the secondary market except A) exchanges. B) capital. C) over-the-counter. D) third market.
capital
Your customer purchases shares of a common stock of a major exchange in a trade that settles the same day. This is an example of which type of trade?
cash settlement trade
During the cooling-off period, underwriters may not A) distribute sales literature or advertising material. B) take indications of interest. C) place a tombstone advertisement. D) distribute a preliminary prospectus.
distribute sales literature or advertising material.
All of the following are features of the exchanges except A) designated market makers maintaining liquidity. B) two-dollar brokers assisting in maintaining an orderly market. C) a physical floor where traders call out bids and offers. D) employees of the exchange buying and selling securities on the floor.
employees of the exchange buying and selling securities on the floor.
A term indicating that a security is tradable and all of the requirements of the contract to sell the security have been met and the security is ready to be transferred is
good delivery
Private placements are primarily sold to
institutional investors
A shelf registration
is good for two years and requires a supplemental prospectus be filed before each sale.
In the capital markets, securities such as stocks and bonds can be
offered by both public and private sectors
In a prime brokerage account, the prime broker
provides custody and clearing services, as well as margin loans
In order to qualify to invest in a Regulation A Tier 2 offering, a customer must do which of the following?
self-certify that they meet the requirements
An underwriter is placing a tombstone advertisement for a company's new issue. A prospective investor might expect to see all of the following information on the advertisement except A) the names of the underwriting members. B) the number of shares to be sold. C) the names of the company's officers. D) the type of security to be sold (stock or bond).
the names of the company's officers.
Regarding a tombstone advertisement, all of the following are accurate statements except A) all such advertisements must contain an advisory stating that the ad is neither an offer to sell nor a solicitation of an offer. B) they are required by and filed with the SEC in order to announce a new issue to the investing public. C) it is the only type of advertisement permitted between the time the registration statement is filed with the SEC and the effective date. D) they are limited to the information that may be contained in them.
they are required by and filed with the SEC in order to announce a new issue to the investing public.
As participants in a firm commitment underwriting agreement, the underwriters know that
they, the underwriters, will be acting as principals buying the securities from the issuer
Your client is purchasing XYZ corporate bonds and wants to know when regular way settlement is. You should tell her
trade date plus 2 business days
A market maker
trades in a proprietary account to facilitate trading of a security and provide liquidity
All of the following are exempt issuers under the Securities Act of 1933 except A) the U.S. Treasury. B) the State of Montana. C) Helpful Charities, Inc. D) ABC Broker-Dealer, which issues Treasury receipts.
ABC Broker-Dealer, which issues Treasury receipts
All of the following issuers are exempt issuers except A) ABC Railroad Trust. B) ABC Railroad Power Systems, Inc. C) SmallTown Charitable Trust. D) Smalltown Savings and Loan.
ABC Railroad Power Systems, Inc.
Which of the following will not be found in a final prospectus? A) Effective date and offering price B) Agreement among underwriters C) Business plan and use of the proceeds D) Statement that the Securities and Exchange Commission (SEC) neither approves nor disapproves of the issue
Agreement among underwriters
Which of the following prospectus delivery requirements for negotiable securities sold in the secondary markets is not accurate? A) For an additional issue listed on an exchange or Nasdaq there is no delivery requirement. B) For an IPO if listed on an exchange or Nasdaq the delivery requirement is 25 days. C) For an additional issue if the security is non-Nasdaq there is no delivery requirement. D) For an initial public offering (IPO) if non-Nasdaq the delivery requirement is 90 days.
For an additional issue if the security is non-Nasdaq there is no delivery requirement.
A broker-dealer has a line of business restricted solely to the purchase and sale of securities with trade executions being handled by another member firm. Which of the following would best describe this type of firm?
Introducing/fully disclosed
An issuer files a registration statement with the SEC for the sale of new securities on May 1. While reviewing the registration statement, the SEC determines that it has not been filed properly and issues a deficiency letter on May 5. The issuer submits a corrected registration statement on May 8. Which of the following is true regarding the 20-day cooling-off period?
It is halted on the day the deficiency letter is issued and resumes where it left off on the day the corrected registration is received.
On Tuesday, July 3, your customer bought 15 SBRD 30 September calls at 4. On Friday, August 10, the calls are in the money and your customer issues exercise instructions. On which days did the trade and the exercise settle?
July 5 and August 14
An official statement is a disclosure document that would be used in connection with an offering of which of the following securities?
Municipal bonds
A FINRA member purchases 200 shares of BigBox Stores, Inc., common stock on behalf of a customer at a price of $40 per share. The firm charges the customer $80 for this transaction. Which of the following is true?
The firm is acting as a broker
Which of the following would not be expected to be found in a tombstone advertisement for a new issue? A) The number of shares to be offered B) The intended purpose for which to use the sales proceeds C) The name of the issuer or those of the underwriters D) The type of security to be offered (equity or debt)
The intended purpose for which to use the sales proceeds
A final prospectus must include certain information. Which of the following is not required to be included? A) A statement by the SEC that the offering is neither approved or disapproved B) A history of the business including any risks to purchasers that might be unique to that business or industry C) The intended use of the proceeds for such corporate actions including expansion, mergers, or acquisitions D) The underwriting contract and a list of all underwriters named in the contract
The underwriting contract and a list of all underwriters named in the contract
