Series 6: Chapter 1 Practice Questions

Chapter 1 Practice Questions

1. 1. All of the following would be considered a security except:
2. A. Publicly traded stock
3. B. Publicly traded bond
4. C. A variable annuity
5. D. A commodities future
6. 2. Prior to an initial public offering, which statement is most accurate regarding due diligence activities?
7. A. Due diligence of an issuer is not necessary until after a registration statement is filed by the issuer.
8. B. Due diligence only requires an in-person review of the issuer’s business with management.
9. C. Due diligence should include a review of the issuer’s financial statements, an in-person visit with management, and a review of competitors in the industry.
10. D. Due diligence of an issuer should primarily focus on the issuer’s financial statements.
11. 3. Which of the following agreements is an agreement among the underwriters that includes the duties and rights of each member of the syndicate, states the allocation of shares and the liability of each underwriter, and details the compensation for each underwriter and the concessions that will be paid?
12. A. Agreement Among Underwriters
13. B. Underwriting agreement
14. C. Selling Group Agreement
15. D. Selected Dealers Agreement
16. 4. In the cooling-off period, which of the following would not be allowed?
17. A. Making an offer to sell a security with a preliminary prospectus
18. B. Taking orders for the security
19. C. Publishing a tombstone ad
20. D. Distributing a preliminary prospectus
21. 5. Which of the following is not an important underwriting agreement for a new offering?
22. A. Syndicate agreement
23. B. Hypothecation agreement
24. C. Underwriting agreement
25. D. Selling Group Agreement
26. 6. A prospectus must be provided to customers who buy the security on the secondary market. The prospectus must be provided before the completion of the transaction (settleme