SIE: Chapter 6 Practice Questions

Chapter 6 Practice Questions

1. 1. Under the Securities Act of 1933, the standard timeframe for SEC review of a registration statement is:
2. A. 30 calendar days
3. B. 20 calendar days
4. C. 15 business days
5. D. 10 business days
6. 2. An underwriter wishes to enter a stabilizing bid on the NYSE for a new issue whose price has been dropping from its inception. The stabilizing bid must be:
7. A. Higher than the public offering price
8. B. Lower than or equal to the public offering price
9. C. Lower than or equal to the highest independent bid
10. D. There is no necessary relationship between the two prices.
11. 3. In a firm commitment underwriting, the underwriters:
12. A. Agree to assume the risk of a public offering by buying the issue at a preset price and then trying to sell the securities at a public offering price
13. B. Stand by to purchase all shares of stock that current shareholders choose not to exercise their right to buy
14. C. Buy the issue from the issuer as an agent and not a principal, without assuming any liability for the sale
15. D. Guarantee that they can sell the entire issue or else cancel it
16. 4. A tombstone advertisement:
17. A. Is an offer to buy securities in the offering
18. B. Lists the number of shares in the offering and the name of the managing underwriter
19. C. Is an offer to participate in the offering
20. D. Is usually sent in a mailing to retail investors
21. 5. An issuer that registers securities on an automatic shelf registration statement must offer those securities to the public:
22. A. Within 45 days of the effective date of the registration statement
23. B. Immediately
24. C. Within 3 years from the initial effective date of the registration
25. D. Within 1 year of the initial effective date of the registration
26. 6. Which of the following securities would the Trust Indenture Act of 1939 apply to?
27. A. Preferred stock worth $55 million
28. B. A new issue of corporate notes worth $100 million maturing in 270 days