Chapter 7 Practice Questions
1. A well-known seasoned issuer must meet which of the following requirements?
I. Has a worldwide public float of at least $1 billion in common equity or has issued at least $1 billion in nonconvertible securities other than common equity in prior three years
II. Is not a subsidiary of another corporation
III. Is eligible to use Form S-3 or Form F-3
IV. Is not a registered investment company
A. I and II only
B. II and III only
C. III and IV only
D. I and III only
2. In an offering of securities involving an underwriting syndicate, in which document is the underwriting spread typically set out?
A. Agreement among underwriters
B. Underwriting agreement
C. Selected dealers agreement
D. Lock-up agreement
3. Each of the following communications qualifies for an exemption or safe harbor from the Securities Act prohibition on using an unregistered prospectus in a public offering, except:
A. An underwriter who participates in an offering issues glowing statements about the issuer. The statements are made more than 30 days before the registration statement is filed and do not mention the offering.
B. An underwriter places a generic advertisement (tombstone ad) shortly after a registration statement has been filed. The ad lists the security being offered, the price, who will be executing orders for the security, and a URL where a written prospectus may be obtained.
C. A reporting issuer releases an annual statement containing forward-looking financial information. The annual statement is filed with the SEC.
D. A new issuer publishes an advertisement about the issuer’s products. The advertisement does not mention the offering.
4. How long does a shelf registration last for a seasoned issuer?
A. Six months
B. One year
C. Two years
D. Three years
5. A company has the minimum number of shares outstanding to become listed on the NYSE. The day after its