Series 24

Study Question of the Week: March 18, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, Series 62, and Series 79. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 24, Series 62, Series 79):

Flash Dance Corporation, a popular web-based dance academy, is issuing new common stock securities. The company went public 5 years ago and has a public float of $80 million. The company is listed on NASDAQ. What form should Flash Dance Corporation fill out to register the new securities?

Answers:

A. S-1

B. S-2

C. S-3

D. S-8

Correct Answer: C

Rationale: The SEC offers forms for companies to use to file their Registration Statement. The S-3 form is briefer, and therefore much more desirable than the S-1 form. S-1 forms are used for initial public offerings or small, unseasoned reporting companies who are issuing new securities. The S-3 form is used for large, seasoned companies that already report with the SEC. These companies must have a public float of at least $75 million or have their securities listed on a public exchange. The public float is the total market value of the company’s stock not held by insiders or affiliates. The S-1 form requires a full prospectus which includes extensive information about the corporation. In contrast, the S-3 form allows a briefer prospectus which only describes the particular offering, and issuers simply refer to annual reports and other reporting documents that have already been filed. The S-2 form is no longer used by the SEC. The S-8 form is used for employee stock purchase plans. Flash Dance Corporation would file an S-3 form because they are listed on a national stock exchange, and they have a public float over $75 million.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: February 27, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, Series 62, Series 79, and Series 82. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 24, Series 62, Series 79, and Series 82):

A company may file an 8-K after the closing of a PIPE transaction for all of the following reasons except?

Answers:

A. To alert investors of the possible dilutive effects of the transaction

B. To disclose any material non-public information that was revealed to the PIPE investors so that they are not precluded from trading in the stock after the close of the deal

C. To comply with Regulation S-X

D. To comply with Regulation FD

*Fun fact: only 55% of people get this question right

Corrrect Answer: C

Rationale: PIPE (Private Investment in Public Equity) transactions are when public companies raise funds by selling shares in a private offering. Because a PIPE transaction is a private offering, the company does not need to file a registration statement before the deal closes. Most companies typically register the offering after the deal closes, however, so that investors will not be subject to resale restrictions.
After the PIPE transaction, a company typically files an 8-K form to alert their shareholders, the public, and the SEC of the transaction. This serves to inform the shareholders that the PIPE transaction may dilute their current holdings. A more common reason to file an 8-K is to comply with Regulation FD (Fair Disclosure) which requires a company to file an 8-K if the company reveals material, non-public information to people who may trade on the information in the future. A PIPE transaction may require this disclosure because a PIPE transaction is material, non-public information and PIPE investors are privy to this information before the public. A company will usually get investors to agree to keep the information confidential until the close of the transaction, but then an 8-K is filed so that PIPE investors are not precluded from trading in the stock after the close of the deal. Many PIPE investors will require assurance that the 8-K will be filed after the transaction closes before they will agree to invest.

SEC Regulation S-X states that financial statements must be filed with a registration statement and sets forth guidelines as to the type and format of those statements.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: February 19, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 79, Series 82, and Series 99. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 79, Series 82, and Series 99):

Richard had just returned to the States from his third tour of duty in Afghanistan. After relaxing with family and friends for a couple of months, he re-registers with his old employer where he had worked as a broker. In the meantime his license:

Answers:

A. Expired after his second year-long tour of duty

B. Expired ninety days after completing his second tour of duty

C. Remains current

D. Expires in 30 days unless Richard successfully completes his continuing education program

Correct Answer: C

Rationale: FINRA provides licensing relief to registered representatives who are called into or volunteer for active military service. Richard’s license will expire ninety days after completion of active service, unless he re-registers with a member firm before that time. Since he took only two months off before re-registering, Richard’s license is still current and will remain so.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: January 16, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 55, and Series 62. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 7, Series 24, Series 55, and Series 62):
Which of the following is not true of an ECN?

Answers:

A: ECNs can act in an agency or a principal capacity

B: ECNs allow institutional investors to trade with other investors excluding the broker as a go-between

C: Subscribers to an ECN may include institutional investors, broker-dealers and market makers

D: ECN traders can remain anonymous

Correct Answer: A

Rationale: Some standard characteristics of ECNs include:

a. ECNs always act in an agency capacity and do not trade for their own account.
b. ECNs allow institutional investors to trade with other investors excluding the broker as a go-between. Fourth market participants rely on ECNs.
c. Subscribers to an ECN may include institutional investors, broker-dealers and market makers. Individuals that wish to trade through an ECN must have an account with a broker-dealer and their order can then be routed to the ECN for execution.
d. ECNs allow traders to remain anonymous.
e. ECNs are often open 24 hours a day, and are therefore often used by traders after regular market hours.
f. Subscribers pay a fee to the ECN to participate.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: December 26, 2012 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 55, Series 62, Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 7, Series 24, Series 55, Series 62, Series 65, and Series 66):

ABCD is an actively traded security with an inside market of 19.25 – 19.95. A market maker receives an order to sell 100 shares and buys the security from the customer at a net price of ______________. Choose the net price that makes the most sense given what you know about markups, markdowns, and net prices.

Answers:

A: 18.75
B: 19.25
C: 19.95
D: 20.45

Correct Answer: A

Rationale: On a sell order in an active competitive market, the net price will contain a markdown from the best bid. In this case the only price that is lower than the best bid is the $18.75. The markdown amount is calculated by taking $19.25 – $18.75 = $.50. The markdown is $.50/$19.25 = 2.60%.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: December 12, 2012 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, Series 79, and Series 62. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 24, Series 79, and Series 62):

Which of the following is not true regarding tender offers by third-parties?

Answers:

A: Whenever the bidder purchases or intends to purchase more than 5% of a company’s outstanding shares, it must file Schedule TO

B: While the same price must be given to all shareholders as in an issuer’s offer, third-party offers allow an exclusion for certain severance/benefits packages that have been approved by an employee compensation committee

C: The target firm’s management must communicate a position on the tender offer within 4 business days of the offer

D: All recommendations on the tender offer made by the targeted company, its affiliates, and certain other parties must be made using SEC Form, Schedule 14D-9

Correct Answer: C

Rationale: The following are tender offer rules relating to third-party tender offers.

–Whenever the bidder purchases or intends to purchase more than 5% of a company’s outstanding shares, it must file Schedule TO. It must also file a Form 13D, which is a beneficial ownership form.
— All recommendations on the tender offer made by (1) the targeted company and its affiliates, (2) shareholders of the target company, the bidder, and affiliates of either, and (3) anyone acting on behalf of the forgoing or on behalf of the bidder must be made using SEC Form, Schedule 14D-9. The bidder does not use Schedule 14D-9 if it has filed Schedule TO.
–While the same price must be given to all shareholders as in an issuer’s offer, third-party offers allow an exclusion for certain severance/benefits packages that have been approved by an employee compensation committee.
–The bidder cannot buy shares outside of the tender offer during the offer period.
–The target firm’s management must communicate a position on the tender offer within 10 business days of the offer. The recommendation can take the form of: (a) accept or reject; (b) remain neutral; or (c) take no position. The target firm’s management must explain why it takes that position. It cannot recommend that shareholders buy shares in the company.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: December 6, 2012 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 79, Series 24, Series 62 and Series 82. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 79, Series 24, Series 62 and Series 82):

An individual or group acting together must file a Schedule 13D form when:

Answers:

A: their stockholdings reach 5% of a corporation’s outstanding shares of common stock

B: their stockholdings reach 10% of a corporation’s outstanding shares of common stock

C: their stockholdings reach 20% of a corporation’s outstanding shares of common stock

D: their stockholdings reach 50% of a corporation’s outstanding shares of common stock

Correct Answer: A

Rationale: Section 13(d) requires an individual or group acting together to file a 13D form when their stockholdings reach 5% of a corporation’s outstanding shares of common stock. This rule gives a corporation that may be the target of an acquisition fair warning in advance. Schedule 13D requires the group to disclose the number of shares owned, background information on the individual filing the form, the purpose of the transaction, and the source of the funds to finance the acquisition of the shares. Schedule 13D must be filed within 10 days of the acquisition of the stock.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: November 8, 2012 Edition

This week’s exam study question from the Solomon Online Exam Simulator question database is now available. This week’s exam question is relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 65, Series 66, and Series 82. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available. Be sure to submit your answers in the comments section below.

Question (Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 65, Series 66, and Series 82):

A couple has just had a baby and they want to start saving for college. What option does NOT offer the opportunity for their investment to grow free of federal taxes?

Answers:

A: Education Savings Account

B: UGMA/UTMA Account

C: 529 College Savings Plan

D: 529 Prepaid Tuition Plan

ANSWER & RATIONALE

Correct Answer: B

Rationale: Unlike the other options, UGMA/UTMA (Uniform Gifts to Minors Act/Uniform Transfers to Minors Act) accounts are subject to federal income and capital gains taxes.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

ANSWER – Study Question of the Week: October 23, 2012 Edition

As a follow up to yesterday’s licensing exam study question, here is your question PLUS answer and rationale. Relevant to Series 6, Series 7, Series 65, Series 66, Series 24, Series 26 and Series 99. Continue reading

As a follow up to yesterday’s licensing exam study question, here is your question PLUS answer and rationale:

Question (Relevant to Series 6, Series 7, Series 65, Series 66, Series 24, Series 26 and Series 99):

Which of the following is true of UGMA/UTMA accounts?

I. Only family members may contribute to a UGMA/UTMA
II. Annual contribution limit of $13,000 per year, per child
III. Assets may only be used for education expenses
IV. Earnings reported under adult custodian’s tax identification

Answers:

A: I, II

B: III, IV

C: II, III

D: None of the choices listed

Correct Answer: D

Rationale: Anyone may contribute to a Uniform Gifts to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) account and there are no contribution limits. Assets in UGMA/UTMA accounts may be used for any purpose and earnings are reported on the minor’s social security account, not the custodian’s.

*Questions featured in the weekly study question series are sampled from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: October 23, 2012 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available (Relevant to Series 6, 7, 65, 66, 24, 26 and 99). Be sure to submit your answers in the comments section and check back tomorrow for the correct answer and rationale. Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available. Be sure to submit your answers in the comments section and check back tomorrow for the correct answer and rationale. Happy studying!

Question (Relevant to Series 6, Series 7, Series 65, Series 66, Series 24, Series 26 and Series 99):

Which of the following is true of UGMA/UTMA accounts?

Answers:

A: I, II

B: III, IV

C: II, III

D: None of the choices listed