Exercise
Circle TRUE or FALSE
- 1. TRUE or FALSE. During the road show, the issuer and the lead underwriter solicit investor interest in the new issue and will make conditional sales if interest is expressed.
- 2. TRUE or FALSE. Pursuant to the Securities Act of 1933, the primary purpose of a company registering its securities with the SEC is to receive SEC approval of the securities before actually offering them to potential buyers.
- 3. TRUE or FALSE. The preliminary prospectus contains almost all the same information as the final prospectus, other than the public offering price.
- 4. TRUE or FALSE. The public offering price for a securities offering is set by the underwriters, based on potential investor interest during the cooling-off period.
- 5. TRUE or FALSE. The cooling-off period is also called the waiting period or the registration period.
- 6. TRUE or FALSE. The nickname of the Securities Act of 1933, the Paper Act, reflects the fact that the SEC requires all forms to be filled out and filed in hard copy rather than electronically.
- 7. TRUE or FALSE. The nickname of the Securities Act of 1933, the Paper Act, reflects the fact that the SEC requires the prospectus be made available to potential securities purchasers in hard copy rather than electronically.
- 8. TRUE or FALSE. The Trust Indenture Act of 1939 states that all companies that issue more than $1 million of corporate bonds must sell these bonds under a trust indenture.
Answers
- 1. FALSE. During the cooling-off period, only indications of interest may be solicited.
- 2. FALSE. The SEC does not approve securities. The Securities Act of 1933 was enacted to make sure that investors have enough information about a security to make an informed decision. The SEC judge