FINRA Series 79 Exam Study Guide with Verified Solutions

FINRA Series 79 Exam Study Guide with Verified Solutions Debt to capitalization ratio use _____________ - Answer️️ -book value, including of equity Green shoe clause - Answer️️ -agreement allowing the underwriters to sell additional shares if demand is high for an offering of securities; can be in part or in full at any price can allow underwriter to profit -doesn't need to be approved by underwriter once its disclosed in the prospectus A company that is not a commercial bank issues a 10-year bond. It is exempt from SEC registration, regardless how sold. The issuer must be what type of organization? - Answer️️ -non-profit Frederick is the CEO of a public company that trades on the OTC Bulletin Board, and he owns 20,000 shares of stock in the company. He has asked you to calculate how many shares he can sell during the next three months. What data do you need to give him an answer? - Answer️️ --total number of shares outstanding TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 2/55 A limit is imposed on the number of control shares an affiliate may sell during any three- month period. The sale can't exceed the greater of 1% of outstanding shares in the same class or the average reported weekly trading volume during the four weeks preceding the sale. However, trading volume is not considered for securities that trade on the OTC Bulletin Board or through OTC Pink. Only __________ are permitted to use free writing prospectuses during the pre- registration period. In the cooling off period (______________________) FWPs may be used by _________, _________, __________, and _________________ issuers. ______________ may never use FWP's. - Answer️️ -1.) WKSI's 2.) After the registration is filed 3.) WKSI's, seasoned, unseasoned, nonreporting 4.) Ineligible Limited partnership interests are typically regulated as _______________ - Answer️️ - securities, under federal and state laws The Securities Exchange Act of 1934 defines insiders as - Answer️️ -officers, directors, and owners of more than 10% of the outstanding stock of a corporation A syndicate is distributing securities of Worldwide Telecom Inc., a company with an average daily trading volume (ADTV) of $9 million and a public float of $60 million. For an underwriter, when does the Regulation M restricted period begin and end? - Answer️️ -begins: day before pricing the offering; TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 3/55 ends: when the distribution is complete ABC Securities is participating in an underwriting for Bright Leaf, Inc., a public company. ABC also serves as a market maker for Bright Leaf and owns a block of its stock. Does it have a conflict of interest? - Answer️️ -Only if it owns at least 10% of the outstanding common stock Are crowdfunding issuers required to update any material changes in the information contained in their Form C disclosures filed with the SEC? If so, when? - Answer️️ - Yes, at least twice over the course of an offering 1.) Within five business days of reaching 50% of the company's target raise 2.) within five business days of reaching 100% of the company's target raise FINRA Rule 5150 - Answer️️ -Fairness Opinions When rendering fairness opinion, firm must disclose: -contingent fees -material relationship for compensation within past 2 years with any party involved in the transaction -independent verification for information that the opinion is reliant on -use of fairness committee -insider compensation (fairness of compensation to any insider of the client company relative to compensation to public shareholders or employees TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 4/55 An investment banking firm is receiving a fee of $25,000 for writing a fairness opinion and providing other advice pertaining to an M&A transaction. In which case must the amount of the fee be disclosed? - Answer️️ -In no case The ratio of current assets to current liabilities is most commonly known as the - Answer️️ -current ratio Price to Book Value Calculation - Answer️️ -(stock price x outstanding shares) / (shareholders equity - goodwill) Rule 139 exclusion is available for - Answer️️ -The Rule 139 exclusion is available only for research coverage that is ongoing and does not represent a broker dealer's initial coverage on the issuer or its securities. two main exemptions that an underwriter may claim as defense against a civil suit alleging an untrue statement in a registration - Answer️️ --"reasonable investigation and grounds for belief" -"lack of knowledge" Which of the following categories of filers must file their Form 10-Q within 40 calendar days? I. Large accelerated filer II. Non-accelerated filer III.Small accelerated filer IV. Accelerated filer - Answer️️ -I and IV TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 5/55 Large accelerated filers ($700 million or greater public float) and accelerated filers ($75 million or greater public float and less than $700 million) have 40 calendar days from the end of the fiscal quarter to file a Form 10-Q. 10-Q filing deadlines of large accelerated filers, compared to accelerated filers, and non-accelerated? - Answer️️ -The same for both The 10-Q filing deadline is 40 days after the end of each fi