Sie Exam 3 Questions With Complete Answers

Which of the following actions on the part of a corporation would require a
registration statement filing with the SEC under Rule 145?
Incorrect answer A. You chose this answer.
A
Stock dividenddistribution
Incorrect answer B. You did not choose this answer.
B
Stock split
Correct answer C. You did not choose this answer.
C
Spin off of a division

,Incorrect answer D. You did not choose this answer.
D
Reverse stock split


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The best answer is C. Corporate distributions that result in an issuer
distributing the exact same class of security to existing shareholders do not
require a registration statement filing with the SEC. Thus, a corporation
distributing a stock dividend or splitting its stock would not require a
registration statement filing. However, if a corporation spins off a subsidiary
to its shareholders, the shareholders are receiving stock in a different
company, so a registration statement must be filed for those shares. If a
corporation merges with another publicly held company, a new
corporation is being created, and a registration statement must be filed as
well.




The use of which tool of the Federal Reserve has the biggest impact on money supply
levels?
Incorrect answer A. You did not choose this answer.
A
Open market operations
Incorrect answer B. You did not choose this answer.
B
Discount rate
Correct answer C. You chose this answer
C
Reserve requirements
Incorrect answer D. You did not choose this answer.
D
Margin on securities


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, The best answer is C.
Monetary policy tools of the Fed include setting reserve requirements,
open market operations, setting the discount rate, and setting margin rates
on securities.
Changing reserve requirements has the largest impact on money supply
levels, due to the effect of the "money multiplier." Because only a small
percentage of deposits are retained on reserve, the amount that is lent out
by the bank "multiplies out" as it is deposited to another bank, which retains
a portion and lends out the balance, which is deposited to another bank,
which retains a portion and lends out the balance, etc.
Changing the reserve requirement would have an enormous expansionary
or contractionary effect on money supply levels - hence this tool of the
Federal Reserve is almost never changed.




A customer wishes to purchase $100,000 face amount of municipal bonds that the
broker-dealer does not have in inventory. Under MSRB rules, the firm should:
Incorrect answer A. You did not choose this answer.
A
sell short the security to the customer
Incorrect answer B. You did not choose this answer.
B
refer the customer to a municipal firm that has the bonds in inventory
Incorrect answer C. You did not choose this answer.
C
contact at least 5 dealers and obtain quotes for the customer
Correct answer D. You chose this answer
D
contact enough dealers so that a reasonable market quote is obtained


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, The best answer is D. Under MSRB rules, when a municipal dealer acts in an
agency capacity, the price charged must be representative of the market
for that type of security. There is no requirement to obtain a pre-set number
of quotes, nor is there a requirement to direct the customer to a dealer that
physically has those bonds. The dealer would not sell short the bonds to
the customer, since short covering is very difficult in the thinly traded
municipal market.




What is DEF Corporation's Quick Ratio?
A
.39:1
Correct answer B. You chose this answer
B
1.1:1
Incorrect answer C. You did not choose this answer.
C
2:1
Incorrect answer D. You did not choose this answer.
D
7.90:1


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The best answer is B.
The formula for the "Quick" Ratio is:


$62,000,000 - $28,000,000$31,000,000=1.1:1




In a best efforts underwriting, the underwriter is acting as a(n):
Correct answer A. You chose this answer
A
agent
Incorrect answer B. You did not choose this answer.