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Question 1 of 10
1. Question
Which of the following statement is (are) true regarding stock?
I. Stock is a form of ownership, or equity, in a company in the form of shares.
II. When a stock is issued, the issuing corporation will hire an managing or lead underwriter to manage the issuance of these equities.
III.Once stocks are sold, records of holders need to be kept, which the issuing company assigns to a transfer agent.
IV. When a corporation needs to raise capital, it issues stocks.
Correct
When a stock is issued, the issuing corporation will hire an investment banking firm to manage the issuance of these equities.
Incorrect
When a stock is issued, the issuing corporation will hire an investment banking firm to manage the issuance of these equities.
-
Question 2 of 10
2. Question
Which entity (ies) is (are) involved in a stock issue?
I. Investment banking firm
II. Investment banking firm
III. Syndicate
IV. UnderwriterCorrect
The different entities involved in a stock issue are:
•Investment banking firm: this firm advises the issuing company and
underwrites theissue
•Managing or lead underwriter: underwriter who puts a syndicatetogether
•Syndicate: group of underwriters, each responsible for selling a portion
of thesecurities
•Underwriter: a broker-dealer who helps the issuer bring securities to
prospectivebuyersIncorrect
The different entities involved in a stock issue are:
•Investment banking firm: this firm advises the issuing company and
underwrites theissue
•Managing or lead underwriter: underwriter who puts a syndicatetogether
•Syndicate: group of underwriters, each responsible for selling a portion
of thesecurities
•Underwriter: a broker-dealer who helps the issuer bring securities to
prospectivebuyers -
Question 3 of 10
3. Question
A syndicate buys shares of ABC Corporation at $10 a share. The price to the public is $12. What will be the syndicate’s spread?
I.$2
II.$22
III.$120
IV.$1.80Correct
Spread = public offering price – price paid to issuer ($12 – $10 = $2)
Incorrect
Spread = public offering price – price paid to issuer ($12 – $10 = $2)
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Question 4 of 10
4. Question
A syndicate buys shares of ABC Corporation at $10 a share. The price to the public is $12. Management fee is 10% and the selling group gets $0.50 a share. What will be the additional takedown?
I. $2
II. $1.80
III. $1.30
IV. $0.50Correct
Spread = public offering price – price paid to issuer ($12 – $10 = $2)
Takedown = spread – management fee ($2 – $0.20 = $1.80)
Additional takedown = takedown – concession ($1.80 – $0.50 = $1.30)Incorrect
Spread = public offering price – price paid to issuer ($12 – $10 = $2)
Takedown = spread – management fee ($2 – $0.20 = $1.80)
Additional takedown = takedown – concession ($1.80 – $0.50 = $1.30) -
Question 5 of 10
5. Question
Which of the following statement(s) is (are) correct regarding Eastern account?
I. In Eastern Accounts, responsibility for sales is shared between members.
II. In Eastern Accounts, each member is only responsible for their portion of assigned syndicate shares.
III. Eastern account holder ensures there is no over-issuance of stock.
IV. Eastern account holder helps the issuer bring securities to prospective buyers.Correct
Eastern Accounts, where responsibility for sales is shared between members.
Incorrect
Eastern Accounts, where responsibility for sales is shared between members.
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Question 6 of 10
6. Question
George Jones is part of a syndicate group of five underwriters. The group commits to 1,000,000 shares. He has sold his share of 200,000 shares. 100,000 shares re- main unsold. Under an Eastern Account, he would be responsible for selling another
I. 20,0000 shares
II. 20,000 shares
III. 10,000 shares
IV. 10,0000 sharesCorrect
Under an Eastern Account, he would be responsible for selling another 20,000 shares (100,000 divided by five members).
Incorrect
Under an Eastern Account, he would be responsible for selling another 20,000 shares (100,000 divided by five members).
-
Question 7 of 10
7. Question
How many steps a corporation must go through to register them, when it decides it wants to issue securities?
Correct
When a corporation decides it wants to issue securities, it must go through six steps to register them.
Incorrect
When a corporation decides it wants to issue securities, it must go through six steps to register them.
-
Question 8 of 10
8. Question
Which is the correct consequences of steps in registering securities?
I. Registering with SEC> Issuance of the preliminary prospectus>Forming the underwriting group or syndicate> Meeting “Blue Sky Laws” requirements> Issuing company and underwriters> >Public Offering
II. Registering with SEC> Forming the underwriting group or syndicate> Issuance of the preliminary prospectus > Issuing company and underwriters> Meeting “Blue Sky Laws” requirements>Public Offering
III. Registering with SEC> Issuance of the preliminary prospectus>Forming the underwriting group or syndicate> Issuing company and underwriters> Meeting “Blue Sky Laws” requirements>Public Offering
IV. Registering with SEC> Issuance of the preliminary prospectus> Issuing company and underwriters >Forming the underwriting group or syndicate> Meeting “Blue Sky Laws” requirements>Public OfferingCorrect
The six steps in registering securities are:
1.Registering with Securities and Exchange Commission (SEC) with the
name of the corporation, business description, officer information, andcapitalization2.Issuance of the preliminary prospectus, or red herring, to give potential
investors more information about the upcoming offering
3.Forming the underwriting group or syndicate.
4.Issuing company and underwriters meet to formalize agreements re-
garding the issue. This is known as a due diligence meeting
5.Meeting “Blue Sky Laws” requirements. The corporation will register
with the state(s)
6.Public Offering, with fina lprospectusIncorrect
The six steps in registering securities are:
1.Registering with Securities and Exchange Commission (SEC) with the
name of the corporation, business description, officer information, andcapitalization2.Issuance of the preliminary prospectus, or red herring, to give potential
investors more information about the upcoming offering
3.Forming the underwriting group or syndicate.
4.Issuing company and underwriters meet to formalize agreements re-
garding the issue. This is known as a due diligence meeting
5.Meeting “Blue Sky Laws” requirements. The corporation will register
with the state(s)
6.Public Offering, with fina lprospectus -
Question 9 of 10
9. Question
In the 1929 stock market crash, many investors lost their money due to-
Correct
In the 1929 stock market crash, many investors lost their money due to fraudu- lently represented investment
Incorrect
In the 1929 stock market crash, many investors lost their money due to fraudu- lently represented investment
-
Question 10 of 10
10. Question
Which are the particulars that a corporation need to include when it decides it wants to register with Securities and Exchange Commission (SEC)?
I. Name of the Corporation
II. Business description
III. Officer information
IV. CapitalizationCorrect
Registering with Securities and Exchange Commission (SEC) with the
name of the corporation, business description, officer information, and capitalizationIncorrect
Registering with Securities and Exchange Commission (SEC) with the
name of the corporation, business description, officer information, and capitalization