Exercise
Fill in the blank with the appropriate term.
1.An issuing company is only allowed to sell its securities to the public during the _____ period.
2.The main purpose of _____ is to deter the unfair manipulation of the price of a security before, during, and after a public offering.
3.A _____ is made by underwriters during an IPO with the intent of preventing the price of the new issue from dropping during the offering.
4.Insider trading occurs when someone purchases or sells a security based on _____.
5.An “offering of securities at a stated public offering price or prices” in the United States or its territories is known as _____.
Choose the correct answer.
6.Which of the following 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?
A.Agreement Among Underwriters
B.Underwriting agreement
C.Selling Group Agreement
D.Selected Dealers Agreement
7.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 (settlement). This practice must continue for up to _____ after a security’s IPO for securities listed on an exchange or NASDAQ.
A.25 days
B.40 days
C.90 days
D.1 year
8.SEC Rules 137, 138, and 139 refer to safe harbors available to “certain publications.” What publications are those?
A.Annual reports
B.Prospectuses
C.Research reports
D.Registration statements
9.Johnny hears a rumor that Google will buy Apple. He makes trades based on the information and makes a lot of money on Apple stock over the next six months. The rumor happens to be false. Which of the following is true?
A.Johnny has committed insider trading because he traded on a rumor,