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Question 1 of 10
1. Question
For purposes of determining the value to be assigned to securities received as underwriting compensation, which of the following criteria and procedures shall not be applied?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
For purposes of determining the value to be assigned to securities received as underwriting compensation, the following criteria and procedures shall be applied.
(1) Limitation on Securities Received Upon Exercise or Conversion of Another Security
(2) Valuation of Securities That Do Not Have an Exercise or Conversion Price
(3) Valuation of Securities That Have an Exercise or Conversion Price
(4) Valuation Discount For Securities With a Longer Resale RestrictionIncorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
For purposes of determining the value to be assigned to securities received as underwriting compensation, the following criteria and procedures shall be applied.
(1) Limitation on Securities Received Upon Exercise or Conversion of Another Security
(2) Valuation of Securities That Do Not Have an Exercise or Conversion Price
(3) Valuation of Securities That Have an Exercise or Conversion Price
(4) Valuation Discount For Securities With a Longer Resale Restriction -
Question 2 of 10
2. Question
While Limitation on Securities Received Upon Exercise or Conversion of Another Security, which of the following is incorrect inn underwriter and related person may not receive?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Limitation on Securities Received Upon Exercise or Conversion of Another Security
An underwriter and related person may not receive a security (including securities in a unit), a warrant for a security, or a security convertible into another security as underwriting compensation in connection with a public offering.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Limitation on Securities Received Upon Exercise or Conversion of Another Security
An underwriter and related person may not receive a security (including securities in a unit), a warrant for a security, or a security convertible into another security as underwriting compensation in connection with a public offering. -
Question 3 of 10
3. Question
When it is Limitation on Securities Received Upon Exercise or Conversion of Another Security, which of the following is true if an underwriter and related person may not receive a security?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Limitation on Securities Received Upon Exercise or Conversion of Another Security
An underwriter and related person may not receive a security (including securities in a unit), a warrant for a security, or a security convertible into another security as underwriting compensation in connection with a public offering unless:
(A) the security received or the security underlying the warrant or convertible security received is identical to the security offered to the public or to a security with a bona fide independent market; or
(B) the security can be accurately valued, as requiredIncorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Limitation on Securities Received Upon Exercise or Conversion of Another Security
An underwriter and related person may not receive a security (including securities in a unit), a warrant for a security, or a security convertible into another security as underwriting compensation in connection with a public offering unless:
(A) the security received or the security underlying the warrant or convertible security received is identical to the security offered to the public or to a security with a bona fide independent market; or
(B) the security can be accurately valued, as required -
Question 4 of 10
4. Question
Regarding Valuation of Securities That Do Not Have an Exercise or Conversion Price, which of the following statement(s) is/are true?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Do Not Have an Exercise or Conversion Price
Securities that do not have an exercise or conversion price shall have a compensation value based on:
(A) the difference between:
(i) either the market price per security on the date of acquisition, or, if no bona fide independent market exists for the security, the public offering price per security; and
(ii) the per security costIncorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Do Not Have an Exercise or Conversion Price
Securities that do not have an exercise or conversion price shall have a compensation value based on:
(A) the difference between:
(i) either the market price per security on the date of acquisition, or, if no bona fide independent market exists for the security, the public offering price per security; and
(ii) the per security cost -
Question 5 of 10
5. Question
Which one of the following is incorrect while securities that do not have an exercise or conversion price shall have a compensation value?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Do Not Have an Exercise or Conversion Price
Securities that do not have an exercise or conversion price shall have a compensation value based on:
(A) the difference between:
(i) either the market price per security on the date of acquisition, or, if no bona fide independent market exists for the security, the public offering price per security; and
(ii) the per security cost;
(B) multiplied by the number of securities received or to be received as underwriting compensation;
(C) divided by the offering proceeds; and
(D) multiplied by one hundred.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Do Not Have an Exercise or Conversion Price
Securities that do not have an exercise or conversion price shall have a compensation value based on:
(A) the difference between:
(i) either the market price per security on the date of acquisition, or, if no bona fide independent market exists for the security, the public offering price per security; and
(ii) the per security cost;
(B) multiplied by the number of securities received or to be received as underwriting compensation;
(C) divided by the offering proceeds; and
(D) multiplied by one hundred. -
Question 6 of 10
6. Question
Regarding Valuation of Securities That Have an Exercise or Conversion Price, which one of the following don’t have have an exercise or conversion price (“warrants”) shall have a compensation value?
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value.Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value. -
Question 7 of 10
7. Question
Which one of the following is incorrect formula that have an exercise or conversion price (“warrants”) shall have a compensation value?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the following formula:
(A) minus the resultant of the exercise or conversion price per warrant less either:
(i) the market price per security on the date of acquisition, where a bona fide independent market exists for the security, or
(ii) the public offering price per security;Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the following formula:
(A) minus the resultant of the exercise or conversion price per warrant less either:
(i) the market price per security on the date of acquisition, where a bona fide independent market exists for the security, or
(ii) the public offering price per security; -
Question 8 of 10
8. Question
Regarding Valuation of Securities That Have an Exercise or Conversion Price, which one of the following formula is incorrect?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the following formula:
(A) the public offering price per security multiplied by .65;
(B) minus the resultant of the exercise or conversion price per warrant less either:
(i) the market price per security on the date of acquisition, where a bona fide independent market exists for the security, or
(ii) the public offering price per security;
(C) divided by two;
(D) multiplied by the number of securities underlying the warrants;Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the following formula:
(A) the public offering price per security multiplied by .65;
(B) minus the resultant of the exercise or conversion price per warrant less either:
(i) the market price per security on the date of acquisition, where a bona fide independent market exists for the security, or
(ii) the public offering price per security;
(C) divided by two;
(D) multiplied by the number of securities underlying the warrants; -
Question 9 of 10
9. Question
While Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value, which of the following formula based on the following formula?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the following formula:
(a) multiplied by the number of securities underlying the warrants;
(b) less the total price paid for the warrants;
(c) divided by the offering proceeds; and
(d) multiplied by one hundredIncorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the following formula:
(a) multiplied by the number of securities underlying the warrants;
(b) less the total price paid for the warrants;
(c) divided by the offering proceeds; and
(d) multiplied by one hundred -
Question 10 of 10
10. Question
For options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the formula: how much is the compensation value?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the following formula: provided, however, that, notwithstanding paragraph (e)(4) below, such warrants shall have a compensation value of at least .2% of the offering proceeds for each amount of securities that is up to 1% of the securities being offered to the public (excluding securities subject to an overallotment option).Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Valuation of Non-Cash Compensation
Valuation of Securities That Have an Exercise or Conversion Price
Options, warrants or convertible securities that have an exercise or conversion price (“warrants”) shall have a compensation value based on the following formula: provided, however, that, notwithstanding paragraph (e)(4) below, such warrants shall have a compensation value of at least .2% of the offering proceeds for each amount of securities that is up to 1% of the securities being offered to the public (excluding securities subject to an overallotment option).