Series 79: Chapter 5 Practice Question Answers

Chapter 5 Practice Question Answers

1. 1. Answer: C. Choices III and IV both describe requirements for WKSI status. Choice I is mostly but not quite right: a WKSI must have worldwide public float of at least $700 million in common equity or have issued at least $1 billion in nonconvertible securities other than common equity in prior three years. Choice II is entirely wrong: a WKSI may be a subsidiary of another company if it qualifies as a WKSI on its own account.
2. 2. Answer: A. A seasoned issuer such as Unstable Isotopes may use an FWP in connection with an offering after a registration statement has been filed. A seasoned issuer is not required to provide or link to a preliminary prospectus along with or in advance of the FWP, so B and D are incorrect. (This describes a requirement for non-reporting and unseasoned issuers.) Choice D is also incorrect because an issuer may use an FWP before the registration becomes effective. Only a WKSI may use an FWP before filing a registration statement, so C is incorrect.
3. 3. Answer: C. A shelf registration is valid for three years. If the issuer files a new registration statement before the end of the three years, the issuer may continue to offer shares for another 180 days after the end of the three-year period, or until the new registration statement becomes effective, whichever comes first. Here, MegaCorp has not filed a new registration statement, so three years is the limit.
4. 4. Answer: A. Rule 163A sets forth an exemption for certain communications made more