Series 7: Exercise

Taken from our Series 7 Online Guide

Exercise

Match the following terms with the best relating statement.

A. All-or-none commitment

B. Best-efforts commitment

C. Firm commitment

D. Mini-max commitment

1. _____ The underwriter commits to sell a minimum number of shares of the offering or the offering will be cancelled. The underwriter is expected only to use its best efforts to sell the remainder.

2. _____ The underwriter agrees to purchase all the securities at a discount and then sell the securities to the public at a public offering price. The underwriter assumes all the risk of the offering, including the liability of any unsold shares.

3. _____ The underwriter sells all the shares in the offering or the offering is voided.

4. _____ The underwriter agrees to use its best efforts to sell the issuer’s securities, but the underwriter does not guarantee that all the shares will be sold and is not financially responsible for the securities it does not sell.

Use the list below to fill in the blanks.

A. Initial public offering

B. Rights offering

C. Shelf offering

D. Primary offering

E. Follow-on offering

5. When a company issues and sells new shares to

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