Q&As Final Exams 3 Series 24
Members who have failed to pay required fees and assessments may have their memberships suspended
or cancelled upon 15 days' written notice from FINRA. - correct answer ✔✔Members who have failed to
pay required fees and assessments may have their memberships suspended or cancelled upon 15 days'
written notice from FINRA.
Which of the following securities offerings would require the disclosure to FINRA that investment
banking compensation was being paid to the underwriters?
An initial public offering of a real estate investment trust - correct answer ✔✔Exemptions exist for
nonconvertible debt and preferred stock that is rated investment-grade, an offering of securities being
registered through SEC Form S-3, F-3, F-10, publicly traded Canadian companies, and sold on a firm-
commitment basis, and an exchange offering of securities that are listed on the Nasdaq Global Market,
the NYSE, or the American Stock Exchange.
A customer places a held limit order at a member firm. The firm may trade ahead of this order under
which of the following conditions?
Another trading desk has no knowledge of the order - correct answer ✔✔A member firm may trade
ahead of a customer if the no-knowledge exception applies. However, there must be effective
information barriers between the various trading desks at the member firm.
There is no exception for retail orders. An order for 11,000 shares at $8.00 is not considered a large retail
order, it must be valued at $100,000 or higher.
An issuer files an S-1 Form in the case of an IPO. Part of the S-1 Form is the preliminary registration
statement or red herring that is used as a disclosure document for potential investors. In most cases, the
offering price is omitted from the red herring, although a price range is permitted.
Once this has been established, the issuer would file the final prospectus with the offering price, as well
as other information based on the offering proceeds. - correct answer ✔✔If any material information is
added or altered in respect to the original filing, an amended S-1 would be filed.
, Some of these events would include stale financial statements, a change in the number of shares being
offered, material changes related to the issuer's business, change of officers or directors, and
additionally required exhibits.
Once the offering price is established, the issuer would file the final prospectus with the SEC.
A corporation is about to go public. Its shares will be quoted on the OTCBB. A BD selling the securities in
the aftermarket is required to deliver a prospectus to purchasers within how many days following the
effective date of registration?
90 - correct answer ✔✔If the issuer was not a reporting company prior to filing, but will be listed on an
exchange or on Nasdaq as of the effective date, the requirement applies for 25 days.
On a loan of stock between broker-dealers, the customer lending the stock retains all rights of
ownership, such as collecting dividends, but does not retain the right to vote.
This right goes to the new owner of the stock. - correct answer ✔✔On a loan of stock between broker-
dealers, the customer lending the stock retains all rights of ownership, such as collecting dividends, but
does not retain the right to vote.
This right goes to the new owner of the stock.
The effective date of an initial public offering is:
Determined by the SEC. - correct answer ✔✔The effective date of an SEC registration statement relating
to an initial public offering is determined by the SEC.
If the security will be listed on an exchange, the effective date is usually the day before the security will
begin trading on that exchange.
Members who have failed to pay required fees and assessments may have their memberships suspended
or cancelled upon 15 days' written notice from FINRA. - correct answer ✔✔Members who have failed to
pay required fees and assessments may have their memberships suspended or cancelled upon 15 days'
written notice from FINRA.
Which of the following securities offerings would require the disclosure to FINRA that investment
banking compensation was being paid to the underwriters?
An initial public offering of a real estate investment trust - correct answer ✔✔Exemptions exist for
nonconvertible debt and preferred stock that is rated investment-grade, an offering of securities being
registered through SEC Form S-3, F-3, F-10, publicly traded Canadian companies, and sold on a firm-
commitment basis, and an exchange offering of securities that are listed on the Nasdaq Global Market,
the NYSE, or the American Stock Exchange.
A customer places a held limit order at a member firm. The firm may trade ahead of this order under
which of the following conditions?
Another trading desk has no knowledge of the order - correct answer ✔✔A member firm may trade
ahead of a customer if the no-knowledge exception applies. However, there must be effective
information barriers between the various trading desks at the member firm.
There is no exception for retail orders. An order for 11,000 shares at $8.00 is not considered a large retail
order, it must be valued at $100,000 or higher.
An issuer files an S-1 Form in the case of an IPO. Part of the S-1 Form is the preliminary registration
statement or red herring that is used as a disclosure document for potential investors. In most cases, the
offering price is omitted from the red herring, although a price range is permitted.
Once this has been established, the issuer would file the final prospectus with the offering price, as well
as other information based on the offering proceeds. - correct answer ✔✔If any material information is
added or altered in respect to the original filing, an amended S-1 would be filed.
, Some of these events would include stale financial statements, a change in the number of shares being
offered, material changes related to the issuer's business, change of officers or directors, and
additionally required exhibits.
Once the offering price is established, the issuer would file the final prospectus with the SEC.
A corporation is about to go public. Its shares will be quoted on the OTCBB. A BD selling the securities in
the aftermarket is required to deliver a prospectus to purchasers within how many days following the
effective date of registration?
90 - correct answer ✔✔If the issuer was not a reporting company prior to filing, but will be listed on an
exchange or on Nasdaq as of the effective date, the requirement applies for 25 days.
On a loan of stock between broker-dealers, the customer lending the stock retains all rights of
ownership, such as collecting dividends, but does not retain the right to vote.
This right goes to the new owner of the stock. - correct answer ✔✔On a loan of stock between broker-
dealers, the customer lending the stock retains all rights of ownership, such as collecting dividends, but
does not retain the right to vote.
This right goes to the new owner of the stock.
The effective date of an initial public offering is:
Determined by the SEC. - correct answer ✔✔The effective date of an SEC registration statement relating
to an initial public offering is determined by the SEC.
If the security will be listed on an exchange, the effective date is usually the day before the security will
begin trading on that exchange.
