Series 79 Exams Questions with Correct Answers
When a customer requests access to FINRA's rule manual, it is
permissible for the firm to Correct Answer-Firms must provide a current
copy of the FINRA Manual for examination by customers upon request.
Firms may comply with this rule by maintaining electronic access to the
FINRA Manual and providing access to the electronic version. Written
request is not required.
Rule 144 applies Correct Answer-Corporate insiders owning more than
10 % of company's securities
All customers must receive written statements of account no less than
Correct Answer-quarterly. If there has been any recent activity in the
account, statements are required to be provided monthly
A firm's procedures to protect the free flow of material, non-public
information to trading and sales departments
I. Prohibit or restrict the purchase or sale of securities on watch lists
II. Permit the purchase or sale of securities on watch lists but subject the
transactions to scrutiny
III. Prohibit or restrict the purchase or sale of securities on restricted lists
IV. Permit the purchase or sale of securities on restricted lists but subject
the transactions to scrutiny Correct Answer-II and III
,In which of the following situations would it be appropriate for a
registered representative to lend money to a client? Correct Answer-A
registered representative can lend money to, or borrow money from, a
client if the client is a bank or a family member, or there is some type of
outside personal or business relationship. If the client and rep have been
friends for a long time that would potentially qualify. It is important to
note though, that it would still require permission from the firm. If the
client happens to be a bank or family member, permission from the firm
would not be required.
Misappropriation Correct Answer-Misappropriation occurs when
persons steal information from their employer and trade on that
information in any stock, not just their employer's stock. The
misappropriation theory broadens the liability for misuse of inside
information and is illegal.
A firm's request to delist its stock from the NYSE is effective only if
Correct Answer-To delist its stock from the NYSE, a firm must notify
the NYSE and file with the SEC. Delisting will take place if the SEC
does not deny the request.
Personal incomes are an example of an economic indicator that is
Correct Answer-Procyclic indicators move in the same direction as the
general economy: they increase when the economy is thriving and
decrease when it is performing poorly. Gross Domestic Product (GDP)
is another example of a procyclic indicator.
,At which point in an M&A sale process is a fairness opinion typically
rendere Correct Answer-Just prior to Board approval and execution of
the definitive agreement
Mini-max and firm commitment Correct Answer-In a mini-max, a
minimum amount must be sold or the offering is called off. If the
minimum is sold, any unsold portion is returned to the issuer. In a firm
commitment, the underwriters will purchase the entire issue.
Call schedule Correct Answer-A call schedule as defined in a bond's
indenture lists each call date of an existing issue and the corresponding
price at which the issue can be called. A bond's call schedule and call
prices depend on its term and coupon. They are typically set at four
years ("Non call-4" or "NC-4") for a seven/eight-year fixed rate bond
and five years ("NC-5") for a ten-year fixed rate bond.
JaneDoe Securities is the lead underwriter in an IPO for
NewElectronicsCo. NewElectronicsCo plans on selling 7.5mm shares at
an offering price of $18. The manager's fee is $.30, the full takedown is
$1.20 and the selling concession is $.90. Jim Securities, Inc. and Joe
Securities, Inc. are syndicate members. Allocations are 40%, 35% and
25% for JaneDoe, Jim Securities and Joe Securities, respectively. Out of
its allocation, JaneDoe Securities sells 60% of the shares and the selling
group sells the rest. What is the total compensation to JaneDoe
Securities, Inc.? Correct Answer-The total spread to the syndicate is the
manager's fee of $.30 plus the $1.20 full takedown, for a total of $1.50.
The selling concession is a component of the full takedown, so is not
taken into account in the calculation. The selling concession is $.90 and
the underwriting fee is $.30, for a total takedown of $1.20. JaneDoe
Securities has an allocation of 40% of the total offering, or 3.00 million
, shares. As the manager, JaneDoe receives the manager's fee for all
7.5mm shares. For its 40% allocation it receives the underwriting fee,
and for the 60% of the allocation that it sells it receives the selling
concession:
7.5mm shares x $.30 manager's fee = $2.25mm
3.0mm shares x $.30 underwriting fee = $0.9mm
60% x 3.00mm shares x $.90 selling concession = $1.62mm
Total = $4,770,000
Correct Answer-Normally, audited income statements and cash flows
statements are required for the three most recent fiscal years. However,
if the company lacks such history, it must include these audited
statements in the registration for those fiscal years it has been in
operation. There is no requirement to include projections of future
performanc
To qualify for confidential treatment, a preliminary proxy filing must
fulfill which of the following requirements? Correct Answer-Preliminary
proxies can be kept from public disclosure until they become definitive,
but only if they adhere to certain rules. They must be marked
confidential and public communication must have been limited to a
basic Rule 135 announcement. Confidentiality is not allowed in going
private and rollup transactions.
What is the highest price at which the firm can enter a stabilization bid?
Correct Answer-Under Regulation M Rule 104, an underwriter can
stabilize a new issue no higher than the most recent transaction price or
the best independent bid, whichever is greater.
When a customer requests access to FINRA's rule manual, it is
permissible for the firm to Correct Answer-Firms must provide a current
copy of the FINRA Manual for examination by customers upon request.
Firms may comply with this rule by maintaining electronic access to the
FINRA Manual and providing access to the electronic version. Written
request is not required.
Rule 144 applies Correct Answer-Corporate insiders owning more than
10 % of company's securities
All customers must receive written statements of account no less than
Correct Answer-quarterly. If there has been any recent activity in the
account, statements are required to be provided monthly
A firm's procedures to protect the free flow of material, non-public
information to trading and sales departments
I. Prohibit or restrict the purchase or sale of securities on watch lists
II. Permit the purchase or sale of securities on watch lists but subject the
transactions to scrutiny
III. Prohibit or restrict the purchase or sale of securities on restricted lists
IV. Permit the purchase or sale of securities on restricted lists but subject
the transactions to scrutiny Correct Answer-II and III
,In which of the following situations would it be appropriate for a
registered representative to lend money to a client? Correct Answer-A
registered representative can lend money to, or borrow money from, a
client if the client is a bank or a family member, or there is some type of
outside personal or business relationship. If the client and rep have been
friends for a long time that would potentially qualify. It is important to
note though, that it would still require permission from the firm. If the
client happens to be a bank or family member, permission from the firm
would not be required.
Misappropriation Correct Answer-Misappropriation occurs when
persons steal information from their employer and trade on that
information in any stock, not just their employer's stock. The
misappropriation theory broadens the liability for misuse of inside
information and is illegal.
A firm's request to delist its stock from the NYSE is effective only if
Correct Answer-To delist its stock from the NYSE, a firm must notify
the NYSE and file with the SEC. Delisting will take place if the SEC
does not deny the request.
Personal incomes are an example of an economic indicator that is
Correct Answer-Procyclic indicators move in the same direction as the
general economy: they increase when the economy is thriving and
decrease when it is performing poorly. Gross Domestic Product (GDP)
is another example of a procyclic indicator.
,At which point in an M&A sale process is a fairness opinion typically
rendere Correct Answer-Just prior to Board approval and execution of
the definitive agreement
Mini-max and firm commitment Correct Answer-In a mini-max, a
minimum amount must be sold or the offering is called off. If the
minimum is sold, any unsold portion is returned to the issuer. In a firm
commitment, the underwriters will purchase the entire issue.
Call schedule Correct Answer-A call schedule as defined in a bond's
indenture lists each call date of an existing issue and the corresponding
price at which the issue can be called. A bond's call schedule and call
prices depend on its term and coupon. They are typically set at four
years ("Non call-4" or "NC-4") for a seven/eight-year fixed rate bond
and five years ("NC-5") for a ten-year fixed rate bond.
JaneDoe Securities is the lead underwriter in an IPO for
NewElectronicsCo. NewElectronicsCo plans on selling 7.5mm shares at
an offering price of $18. The manager's fee is $.30, the full takedown is
$1.20 and the selling concession is $.90. Jim Securities, Inc. and Joe
Securities, Inc. are syndicate members. Allocations are 40%, 35% and
25% for JaneDoe, Jim Securities and Joe Securities, respectively. Out of
its allocation, JaneDoe Securities sells 60% of the shares and the selling
group sells the rest. What is the total compensation to JaneDoe
Securities, Inc.? Correct Answer-The total spread to the syndicate is the
manager's fee of $.30 plus the $1.20 full takedown, for a total of $1.50.
The selling concession is a component of the full takedown, so is not
taken into account in the calculation. The selling concession is $.90 and
the underwriting fee is $.30, for a total takedown of $1.20. JaneDoe
Securities has an allocation of 40% of the total offering, or 3.00 million
, shares. As the manager, JaneDoe receives the manager's fee for all
7.5mm shares. For its 40% allocation it receives the underwriting fee,
and for the 60% of the allocation that it sells it receives the selling
concession:
7.5mm shares x $.30 manager's fee = $2.25mm
3.0mm shares x $.30 underwriting fee = $0.9mm
60% x 3.00mm shares x $.90 selling concession = $1.62mm
Total = $4,770,000
Correct Answer-Normally, audited income statements and cash flows
statements are required for the three most recent fiscal years. However,
if the company lacks such history, it must include these audited
statements in the registration for those fiscal years it has been in
operation. There is no requirement to include projections of future
performanc
To qualify for confidential treatment, a preliminary proxy filing must
fulfill which of the following requirements? Correct Answer-Preliminary
proxies can be kept from public disclosure until they become definitive,
but only if they adhere to certain rules. They must be marked
confidential and public communication must have been limited to a
basic Rule 135 announcement. Confidentiality is not allowed in going
private and rollup transactions.
What is the highest price at which the firm can enter a stabilization bid?
Correct Answer-Under Regulation M Rule 104, an underwriter can
stabilize a new issue no higher than the most recent transaction price or
the best independent bid, whichever is greater.
