Tag: Series 79

Study Question of the Week: January 16, 2014 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 62, and Series 79. –ANSWER POSTED– Continue reading

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

Study ? of the Week

Question (Relevant to the Series 7, Series 24, Series 62, and Series 79): 

What IPO method will offer the underwriter a green shoe option?

Answers:

A. Best efforts

B. Mini-max

C. Firm commitment

D. Bought deal

Correct Answer: C. Firm commitment

Rationale: A firm commitment underwriting is an agreement that the underwriter will purchase all the securities at a discount and then sell the securities to the public at a fixed public offering price. In this type of agreement, the underwriter is responsible for the marketing and sale of the securities and assumes all the risk of the offering, including the liability of any unsold shares. An over-allotment option, also called a green shoe option, gives the syndicate the right to require the issuing company to issue up to 15% more shares in the offering at the syndicate’s discretion. Green shoe options are offered on firm commitment underwritings only.

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

Study Question of the Week: January 2, 2014 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 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.

Study ? of the Week

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

10 bond points on a corporate bond is equivalent to:

Answers:

A. $10

B. $100

C. $1,000

D. 10% of a bond’s current value

Correct Answer: B. $100

Rationale: A “point” is an abbreviated term for “one percentage point” of the par value. With regards to corporate bonds, it generally refers to $10 increments of a $1,000 par value bond’s price.

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

 

Testimonial Tuesday: December 24, 2013 Edition

“Your course work and exercise materials were the best preparation I could take for the Series 79 exam.” Continue reading

“Your course work and exercise materials were the best preparation I could take for the Series 79 exam. In my opinion, the most useful aspects of everything  are the well articulated answers in the on-line exam simulation that really helped my understanding the subject matter.” -Alberto Finali, New York, NY

 

Read more reviews here: Solomon Exam Prep Reviews

Study Question of the Week: November 27, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 65, Series 66, and Series 79. –ANSWER POSTED– Continue reading

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

Study ? of the Week

Question (Relevant to the Series 65, Series 66, and Series 79): 

Given the following assumptions for stock ABC, what is its expected return using the Capital Asset Pricing Model (CAPM)? Risk Free Rate: 2%, Expected Return on general stock market: 10%, Beta: .5, Sharpe Ratio: 3.

Answers:

A. 4%

B. 6%

C. 12%

D. 2%

Correct Answer: B. 6%

Rationale: The formula for the Capital Asset Pricing Model (CAPM) is given by the following:  Return on Stock = Risk Free Rate + Beta of Stock x (Return on Market – Risk Free Rate).  Plugging in for Stock ABC gives Return on Stock ABC = 2% + .5 x (10% – 2%) = 6%.  Note the Sharpe Ratio is not used in the CAPM formula.

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

Testimonial Tuesday: November 26, 2013 Edition

“I just passed the Series 79 exam. You guys rock! And your price beats the competitors’. Thanks for the great materials.” Continue reading

 

“I just passed the Series 79 exam. You guys rock! And your price beats the competitors’. Thanks for the great materials.” -Bin Xie, Houston, TX

 

Read more reviews here: Solomon Exam Prep Reviews

Study Question of the Week: October 30, 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 62, Series 65, Series 66, 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.

Study ? of the Week

Question (Relevant to the Series 6, Series 7, Series 62, Series 65, Series 66, Series 79, and Series 82): 

Johnny owns several U.S. Treasury Notes, he reads in the paper that the discount rate has fallen. What can Johnny safely infer about his Treasury Notes?

Answers:

A. On the market, the price of his Treasury Notes has fallen

B. On the market, the price of his Treasury Notes has risen

C. His annual interest from the Notes will increase

D. His annual interest from the Notes will decrease

Correct Answer: B. On the market, the price of his Treasury Notes has risen

Rationale: When the discount rate falls, this suggests that interest rates in general have lowered. This will make the Treasury Notes that Johnny is holding more attractive to buyers because they paid a higher interest rate than what new Treasury Notes are paying. Thus, the price of his Treasury Notes will have risen on the secondary market because buyers are willing to pay a premium for them. The annual interest paid on Treasury Notes is fixed so it will neither increase nor decrease.

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

Study Question of the Week: October 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 62, Series 65, 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.

Study ? of the Week

Question (Relevant to the Series 7, Series 62, Series 65, Series 79, Series 82, and Series 99): 

Branch Environmental Industries is trading at $2 per share and there are 35 million shares of common stock outstanding. The management and board of directors have decided that in order to make the stock more attractive to institutional investors, the share price needs to rise to $5. In order to accomplish that, the company could do which of the following?

Answers:

A. Initiate a 2.5 for 1 stock split which will increase the number of common shares outstanding to 87.5 million.

B. Initiate a 2.5 for 1 stock split which will reduce the number of common shares outstanding to 14 million.

C. Initiate a 1 for 2.5 reverse stock split which will increase the number of common shares outstanding to 87.5 million.

D. Initiate a 1 for 2.5 reverse stock split which will reduce the common shares outstanding to 14 million.

Correct Answer: D. Initiate a 1 for 2.5 reverse stock split which will reduce the common shares outstanding to 14 million.

Rationale: In order to increase the share price to $5, the company would initiate a reverse stock split, that is reduce the number of shares. A stock split would have the opposite effect, it would increase the number of shares and proportionately lower the share price even further which is not what the company wants. In this case, the reverse stock split would be 1 for 2.5 . Mathematically it would be $2 per share/.4 = $5 per new share price. Thus shareholders would give up two-and-one-half $2 shares and they would receive one $5 share in return. The number of shares common shares outstanding would decrease likewise from 35 million to 14 million (35/2.5 = 14).

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

Study Question of the Week: October 2, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24 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 and Series 79): 

An issuer of publicly offered securities must file:

Answers:

A. Five copies of the preliminary prospectus with the SEC no later than the date that it is first sent to investors

B. Ten copies of the preliminary prospectus with the SEC no later than the date that it is first sent to investors

C. Five copies of the preliminary prospectus with the SEC at least 10 days prior to the date that it is first sent to investors

D. Ten copies of the preliminary prospectus with the SEC at least 10 days prior to the date that it is first sent to investors

Correct Answer: A

Rationale: An issuer of publicly offered securities must file five copies of the preliminary prospectus with the SEC no later than the date that it is first sent to investors.

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

Study Question of the Week: September 23, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the 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 79): 

Both Buyer and Target are C corporations. From a taxation point of view, which kind of acquisition structure is generally the most beneficial to the Target’s shareholders?

Answers:

A. The Target’s assets are purchased by the Buyer

B. The Target’s stock is purchased by the Buyer with the Buyer’s stock

C. The Target’s stock is purchased by the Buyer through a 338(h)(10) election

D. The Target’s stock is purchased by the Buyer with cash

Correct Answer: B. The Target’s stock is purchased by the Buyer with the Buyer’s stock

Rationale: From a taxation perspective, an asset purchase is the worst situation for the Target’s shareholders because the shareholders are often subject to double taxation. In this case, the Target first pays a tax on the gain on the sale of its assets. Then if the proceeds are distributed to the Target’s shareholders through a dividend, the shareholders must pay a tax on the dividend. If the company is liquidated, the shareholders must pay taxes on the difference between the proceeds and their tax basis of their shares. The Buyer cannot choose a 338(h)(10) election because this is unavailable to acquirer’s of C corporations. If the Buyer buys the Target’s stock with cash and meets all the requirements of section 338, the Target’s shareholders will need to pay a tax on their gain. If the Buyer buys the Target’s stock with its own stock and meets all the requirements of section 338, the Target pays no corporate tax and the shareholders can defer taxation until they wish to sell the shares.

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