Chapter 4 Practice Questions
1. Midnight Marauders, Inc. has an IPO for its stock, which is listed on the NYSE. Exactly two weeks after the offering closes, Alison purchases 1,000 shares of the stock. What is the latest date that her agent can provide her with a copy of the final prospectus associated with the stock?
A. Alison does not need to be provided with a copy of the final prospectus because she bought the stock after its IPO
B. The date that she made her purchase
C. Two business days after she made her purchase
D. Eleven days after she made her purchase
2. Which of the following would require disclosure to a client?
I. That research was prepared by a third party
II. That a security is a new offering
III. That a professional previously worked for a company that issues securities
IV. That a professional has previously filed for bankruptcy.
A. I and II
B. II and III
C. I, II, and III
D. I, II, III, and IV
3. When its delivery is required, when should a client receive a copy of a preliminary prospectus?
A. By the time of purchase confirmation
B. At least 48 hours prior to sale confirmation
C. Within 48 hours of sale confirmation
D. Within 10 business days of trade settlement
4. Which of the following would be considered inappropriate for a securities professional to state about his registration?
A. That she has passed the Series 63
B. That she is registered to sell securities in her state
C. That she has never had a complaint filed against her registration
D. That her practice has been approved by the state securities administrator
5. Which of the following statements is true of performance guarantees?
A. They cannot be offered to customers
B. They can be offered only to customers who purchase U.S. Treasury securities
C. They can be offered only if a client signs a waiver of his rights
D. They’re permitted as long as a professional publishes a li