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.
A member firm must begin to deduct from its net capital any unresolved short
security difference that has existed for more than seven days. - correct
answer ✔A member firm must begin to deduct from its net capital any
unresolved short security difference that has existed for more than seven
days.
Under Rule 17a-11, a broker-dealer that clears and carries customer accounts
is required to send immediate notice to the SEC and its designated examining
authority (DEA) under which of the following circumstances? - correct answer
✔The total amount of subordinated loans exceeds 70% of the debt/equity total
of the broker-dealer for a period exceeding 90 days
Immediate telegraphic or facsimile notice is required if the ratio of aggregate
indebtedness to net capital exceeds 1,500%, if the dollar amount of net capital
falls below the minimum requirement, or if the broker-dealer's subordinated
loans total more than 70% of its debt and equity for a period exceeding 90
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.
A member firm must begin to deduct from its net capital any unresolved short
security difference that has existed for more than seven days. - correct
answer ✔A member firm must begin to deduct from its net capital any
unresolved short security difference that has existed for more than seven
days.
Under Rule 17a-11, a broker-dealer that clears and carries customer accounts
is required to send immediate notice to the SEC and its designated examining
authority (DEA) under which of the following circumstances? - correct answer
✔The total amount of subordinated loans exceeds 70% of the debt/equity total
of the broker-dealer for a period exceeding 90 days
Immediate telegraphic or facsimile notice is required if the ratio of aggregate
indebtedness to net capital exceeds 1,500%, if the dollar amount of net capital
falls below the minimum requirement, or if the broker-dealer's subordinated
loans total more than 70% of its debt and equity for a period exceeding 90
