Chapter 4 Practice Questions
1. Which of the following are types of best-efforts underwriting when issuing securities?
I. Greenshoe
II. All or none
III. Sell the whole
IV. Mini-max
A. I, II, and III
B. I and II
C. I and IV
D. II and IV
2. Who receives the proceeds of a registered secondary offering?
A. Stockholder
B. Corporation
C. Management
D. Underwriter
3. An investor wishes to invest in the stock of a large, well-established company. The investor should purchase shares of a:
A. Limited partnership
B. LLC
C. S corporation
D. C-corp
4. A well-known seasoned issuer would like to undertake a shelf offering. How long can the issuer sell limited portions of the stock without filing an S-3 registration?
A. Two years
B. Three years
C. Five years
D. Until the last portion of the original issue is sold
5. As part of its registration statement, an underwriter sends a preliminary prospectus to the SEC. A preliminary prospectus is also known as:
A. A Form S-1
B. A tombstone ad
C. An underwriter’s disclosure
D. A red herring
6. The gross profit or underwriting spread in an equity securities issue is composed of:
I. The coupon
II. The concession
III. The managing underwriter’s fee
IV. The underwriting fee
A. I, III, and IV
B. I, II, and IV
C. II, III, and IV
D. I, II, III, and IV
7. A U.S. engineer has invented a promising new technology and a group of Swiss investors wants to invest in the S-corp he has formed to commercialize his technology. If each investor wants to invest $100,000, how many in this group may invest in this tech startup?
A. 100
B. 499
C. unlimited
D. 0
8. Which type of issuer is generally associated with the Form S-3 registration statement?
A. A foreign issuer
B. A well-known seasoned issuer
C. A well-known super issuer
D. An investment company
9. Under FINRA Rule 11880, when must syndicate accounts be close