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Question 1 of 11
1. Question
Which of the following statement(s) is/are untrue in order to avoid dilution when additional securities are issued?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Definitions
A right of pre-emption means the right of a shareholder to acquire additional securities in the same company in order to avoid dilution when additional securities are issued, pursuant to:
(i) any option, shareholder agreement, or other contractual right entered into at the time of a purchase of securities;
(ii) the terms of the security purchased;
(iii) the issuer’s charter or by-laws; or
(iv) the domestic law of a foreign jurisdiction that regulates the issuance of the securities.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Definitions
A right of pre-emption means the right of a shareholder to acquire additional securities in the same company in order to avoid dilution when additional securities are issued, pursuant to:
(i) any option, shareholder agreement, or other contractual right entered into at the time of a purchase of securities;
(ii) the terms of the security purchased;
(iii) the issuer’s charter or by-laws; or
(iv) the domestic law of a foreign jurisdiction that regulates the issuance of the securities. -
Question 2 of 11
2. Question
Regarding definition, what does “Total equity securities” mean?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Definitions
“Total equity securities” means the aggregate of the total shares of:
(i) common stock outstanding of the issuer; and
(ii) common stock of the issuer underlying all convertible securities outstanding that convert without the payment of any additional consideration.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Definitions
“Total equity securities” means the aggregate of the total shares of:
(i) common stock outstanding of the issuer; and
(ii) common stock of the issuer underlying all convertible securities outstanding that convert without the payment of any additional consideration. -
Question 3 of 11
3. Question
Which of the following statement(s) is/are true regarding exceptions from underwriting compensation?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Notwithstanding paragraph (d)(1) above, the following items of value are excluded from underwriting compensation, provided that the member does not condition its participation in the public offering on an acquisition of securities under an exception and any securities purchased are purchased at the same price and with the same terms as the securities purchased by all other investors.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Notwithstanding paragraph (d)(1) above, the following items of value are excluded from underwriting compensation, provided that the member does not condition its participation in the public offering on an acquisition of securities under an exception and any securities purchased are purchased at the same price and with the same terms as the securities purchased by all other investors. -
Question 4 of 11
4. Question
Regarding Exceptions From Underwriting Compensation, what is the time of Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering. -
Question 5 of 11
5. Question
Regarding Exceptions From Underwriting Compensation, how much does each entity manage?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering pursuant to paragraph (b)(4) above by certain entities if:
(i) each entity: 1. manages capital contributions or commitments of $100 million or more, at least $75 million of which has been contributed or committed by persons that are not participating membersIncorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering pursuant to paragraph (b)(4) above by certain entities if:
(i) each entity: 1. manages capital contributions or commitments of $100 million or more, at least $75 million of which has been contributed or committed by persons that are not participating members -
Question 6 of 11
6. Question
How much is it managed by capital contributions or commitments when it’s $25 million or more?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering pursuant to paragraph (b)(4) above by certain entities if:
(i) each entity: manages capital contributions or commitments of $25 million or more, at least 75% of which has been contributed or committed by persons that are not participating members;Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering pursuant to paragraph (b)(4) above by certain entities if:
(i) each entity: manages capital contributions or commitments of $25 million or more, at least 75% of which has been contributed or committed by persons that are not participating members; -
Question 7 of 11
7. Question
Regarding Exceptions From Underwriting Compensation, which of the following statement(s) is/are true about each entity?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Each entity:
a. is a separate and distinct legal person from any member and is not registered as a broker-dealer;
b. makes investments or loans subject to the evaluation of individuals who have a contractual or fiduciary duty to select investments and loans based on the risks and rewards to the entity and not based on opportunities for the member to earn investment banking revenues;
c. does not participate directly in investment banking fees received by any participating member for underwriting public offerings; and
d. has been primarily engaged in the business of making investments in or loans to other companies;Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Determination of Whether Items of Value Are Included In Underwriting Compensation: Exceptions From Underwriting Compensation
Each entity:
a. is a separate and distinct legal person from any member and is not registered as a broker-dealer;
b. makes investments or loans subject to the evaluation of individuals who have a contractual or fiduciary duty to select investments and loans based on the risks and rewards to the entity and not based on opportunities for the member to earn investment banking revenues;
c. does not participate directly in investment banking fees received by any participating member for underwriting public offerings; and
d. has been primarily engaged in the business of making investments in or loans to other companies; -
Question 8 of 11
8. Question
Regarding Exceptions From Underwriting Compensation, each entity makes investments or loans subject to whom?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering pursuant to paragraph (b)(4) above by certain entities if: each entity: makes investments or loans subject to the evaluation of individuals who have a contractual or fiduciary duty to select investments and loans based on the risks and rewards to the entity and not based on opportunities for the member to earn investment banking revenues;Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering pursuant to paragraph (b)(4) above by certain entities if: each entity: makes investments or loans subject to the evaluation of individuals who have a contractual or fiduciary duty to select investments and loans based on the risks and rewards to the entity and not based on opportunities for the member to earn investment banking revenues; -
Question 9 of 11
9. Question
Regarding Purchases and Loans by Certain Entities, how many equity securities do all entities related to each member in acquisitions qualify for this exception?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering pursuant to paragraph (b)(4) above by certain entities if: all entities related to each member in acquisitions that qualify for this exception do not acquire more than 25% of the issuer’s total equity securities during the review period in paragraph (d)(1), calculated immediately following the transaction.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Exceptions From Underwriting Compensation
Purchases and Loans by Certain Entities — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering pursuant to paragraph (b)(4) above by certain entities if: all entities related to each member in acquisitions that qualify for this exception do not acquire more than 25% of the issuer’s total equity securities during the review period in paragraph (d)(1), calculated immediately following the transaction. -
Question 10 of 11
10. Question
Regarding Investments In and Loans to Certain Issuers, when should be securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility?
Correct
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Exceptions From Underwriting Compensation
Investments In and Loans to Certain Issuers — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering.Incorrect
5110. Corporate Financing Rule — Underwriting Terms and Arrangements
Underwriting Compensation and Arrangements: Exceptions From Underwriting Compensation
Investments In and Loans to Certain Issuers — Securities of the issuer purchased in a private placement or received as compensation for a loan or credit facility before the required filing date of the public offering. -
Question 11 of 11
11. Question
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Correct
Incorrect