Chapter 10 Practice Questions
1. Which of the following communications would generally be considered a research report?
A. A report covering current economic and political conditions
B. An email distributed to several hundred contacts reviewing an issuer’s common stock and recommending sale of such stock
C. An internal email circulated among three research analysts discussing the sale of stock in client portfolios
D. A summary analysis of a customer’s portfolio prepared for the customer
2. For which of these types of public offerings is there no quiet period?
A. Follow-on offerings
B. IPOs
C. Offerings by emerging growth companies
D. Bond offerings
3. An IPO’s quiet period:
A. Applies both to analysts’ research reports and to their public appearances
B. Applies only to analysts working for a manager or co-manager
C. Lasts 3 calendar days
D. Lasts 3 business days
4. XYZ is a broker-dealer. ABC is a company that is about to conduct an offering of common stock. ABC is a reporting company that has been current in its reporting over the past 12 months. Which of the following would allow XYZ to publish a research report about ABC? Choose the best answer.
A. XYZ does not participate in the offering until after the report is published.
B. XYZ does not participate in the offering at any point, but is compensated by ABC for publishing the report.
C. The report is about ABC’s bonds, which are not convertible into stock.
D. All the other nationally recognized sources of research for ABC’s industry have conflicts of interest.
5. Trent is a research analyst for ABC Broker-Dealer. Two weeks ago, he published a research report on DEF Electronics that included a buy recommendation. FINRA requires ABC to have policies and procedures prohibiting Trent from:
A. Buying shares in DEF
B. Selling shares in DEF
C. Buying shares in one of DEF’s competitors on the secondary market