SIE Exam question with complete solution 2023 updated

SIE Exam question with complete solution 2023 updatedSecurities Act of 1933 - correct answer Requires full and fair disclosure in connection with the sale of securities to the public. All new issues must be registered with the SEC before public sale. All investors must receive a detailed disclosure document called a "prospectus before purchase". Protects investors who buy new issues by: -requiring registration of new issues -requiring issuers to provide full and fair disclosure about itself and the offering. -requiring issuer to provide all information for an investor to judge the issue's merit -regulating underwriting and distribution of primary and secondary issues -providing criminal penalties for fraud What is the difference between Public and Private Securities Offering? - correct answer A public securities offering are sold to the investing public while a private securities offering is sold to private investors (accredited investors). Public offerings are regulated under the Securities act of 1933 while private offerings are exempt from the registration requirements of the act (aka exempt offerings) Initial Public Offering (IPO) - correct answer When a security is first offered by the issuer, it is known as an IPO. After the first offering, any proceeds received are known as follow- on offerings or additional public offerings (APO). -corporations only have one IPO but can have unlimited APOS What makes an offering a primary offering? - correct answer If the proceeds go only to the issuer. What is the difference between primary offerings and public offerings? - correct answer In a primary offering the proceeds go to the issuing entity (corporation or governments) while a secondary offering's proceeds go to the selling shareholders. Secondary offerings occur when individuals in a corporation (CEO) decides there is more to be gained by selling their shares to public rather than holding them. Best efforts underwriting vs. Firm commitment underwriting - correct answer Best efforts has the underwriter as an agent and not principal meaning they are not required to buy all the stock from the issuer, they just assist in them being bought. The risk falls on the issuer so that if it is not sold, the issuer