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. 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. 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
4. 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
5. An underwriting spread consists of all of the following, except:
A. The concession
B. The underwriting fee
C. The coupon
D. The managing underwriter’s fee
6. 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
7. 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
8. Under FINRA Rule 11880, when must syndicate accounts be closed?
A. Within 90 days after the syndicate settlement date
B. Within 6 months after the syndicate settlement date
C. Within 180 days after the corporate securities of a public offering are offered to the syndicate
D. Within 30 days after the first sale is made
9. A trust indenture is a contract betwe