APMA (Applied Mathematics) – Core Concepts, Financial Applications
& Exam Guide
Financial Intermediaries - correct answer ✔✔Banks, S&Ls, Credit Unions, Brokers, Dealers,
Investment Bankers, Mutual Funds, Insurance Companies
Underwriter - correct answer ✔✔The investment banker who agrees to lead the offering
process, also known as the originating house
Syndicate - correct answer ✔✔Other securities firms that agree to assist with marketing the
offer
Best efforts agreement - correct answer ✔✔No guarantees from investment bankers to the
company going public—they will sell as many shares
as possible
Firm Commitment - correct answer ✔✔Investment bankers guarantee company that entire
issue will be purchased; investment bankers absorb
loss if they fail to sell entire issue to investors
Red Herring - correct answer ✔✔A preliminary prospectus
Prospectus - correct answer ✔✔The offering document for the sale of securities
Registration - correct answer ✔✔The process of filing the prospectus with the SEC
Green Shoes - correct answer ✔✔The right to increase the size of an offering
, Initial Public Offering (IPO) - correct answer ✔✔A company's first public offering of
securities
Secondary Offering - correct answer ✔✔A sale of securities to the public by insiders or other
affiliated persons
Brokers - correct answer ✔✔Agents of sellers of securities who receive a commission for
executing a transaction
Dealers - correct answer ✔✔Principals who buy and sell securities for their own accounts.
Known as a market maker in an OTC market and a specialist in a securities exchange
Dealer Bid-Ask - correct answer ✔✔Bid: Price at which the dealer will buy
Ask: Price at which the dealer will sell
Venture capital - correct answer ✔✔Raised by new or relatively new companies that are not yet
of sufficient size or with adequate professional management to consider a public offering
Seed capital - correct answer ✔✔This is for new companies without any products and
provides them cash for product development and market research
Start-up capital - correct answer ✔✔Cash is provided for initial marketing activities, but
not for sales activities
First-stage financing - correct answer ✔✔Cash is provided for manufacturing and sales
activities
& Exam Guide
Financial Intermediaries - correct answer ✔✔Banks, S&Ls, Credit Unions, Brokers, Dealers,
Investment Bankers, Mutual Funds, Insurance Companies
Underwriter - correct answer ✔✔The investment banker who agrees to lead the offering
process, also known as the originating house
Syndicate - correct answer ✔✔Other securities firms that agree to assist with marketing the
offer
Best efforts agreement - correct answer ✔✔No guarantees from investment bankers to the
company going public—they will sell as many shares
as possible
Firm Commitment - correct answer ✔✔Investment bankers guarantee company that entire
issue will be purchased; investment bankers absorb
loss if they fail to sell entire issue to investors
Red Herring - correct answer ✔✔A preliminary prospectus
Prospectus - correct answer ✔✔The offering document for the sale of securities
Registration - correct answer ✔✔The process of filing the prospectus with the SEC
Green Shoes - correct answer ✔✔The right to increase the size of an offering
, Initial Public Offering (IPO) - correct answer ✔✔A company's first public offering of
securities
Secondary Offering - correct answer ✔✔A sale of securities to the public by insiders or other
affiliated persons
Brokers - correct answer ✔✔Agents of sellers of securities who receive a commission for
executing a transaction
Dealers - correct answer ✔✔Principals who buy and sell securities for their own accounts.
Known as a market maker in an OTC market and a specialist in a securities exchange
Dealer Bid-Ask - correct answer ✔✔Bid: Price at which the dealer will buy
Ask: Price at which the dealer will sell
Venture capital - correct answer ✔✔Raised by new or relatively new companies that are not yet
of sufficient size or with adequate professional management to consider a public offering
Seed capital - correct answer ✔✔This is for new companies without any products and
provides them cash for product development and market research
Start-up capital - correct answer ✔✔Cash is provided for initial marketing activities, but
not for sales activities
First-stage financing - correct answer ✔✔Cash is provided for manufacturing and sales
activities
