Series 79 Diagnostic 2 Qs and answers verified to pass
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Course
GARP
Institution
GARP
Series 79 Diagnostic 2 Qs and answers verified to pass A large accelerated filer's fiscal year ends on September 30. By what date must it file its first quarterly 10-Q report for the next fiscal year, beginning October 1? - correct answer February 9
For large accelerated filers, a 10-Q must be...
Series 79 Diagnostic 2 Qs
A large accelerated filer's fiscal year ends on September 30. By what date
must it file its first quarterly 10-Q report for the next fiscal year, beginning
October 1? - correct answer ✔February 9
For large accelerated filers, a 10-Q must be filed within 40 days after the close
of each fiscal quarter, except at the end of the company's fiscal 4th quarter,
when a 10-K is filed. The company's first fiscal quarter ends on December 31.
So the 10-Q must be filed by February 9.
FINRA Rules 5130 prohibits the sale of a new issue to all of the following
accounts EXCEPT
A) An individual account owned by an employee of another BrokerDealer
B) An individual account owned by the spouse of a Registered Representative
C) An individual account owned by an attorney of the managing underwriter
D) An individual account owned by a client of the managing underwriter -
correct answer ✔D) An individual account owned by a client of the managing
underwriter
FINRA Rule 5130 defines a restricted person as any FINRA member firm, a
broker-dealer and its employees, finders or fiduciaries (i.e. attorneys and
accountants) of the managing underwriter, or immediate family members of
any of those persons. New issues may not be sold into an account in which a
restricted person has ownership. New issues can be sold to clients of the
underwriter.
A free writing prospectus is required to contain a legend informing investors
that - correct answer ✔A) the issuer has filed a registration and prospectus,
which should be read before investing.
,The free writing prospectus legend must be similar to this one: "The issuer
has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should
read the prospectus in that registration statement and other documents the
issuer has filed with the SEC for more complete information about the issuer
and this offering."
In which scenarios does the acquirer need to file a registration statement?
I. Where an "affiliate" is part of the buyout group
II. When shares are issued as part of the purchase consideration for a public
target
III. Target market capitalization greater than $1bn
IV. When public debt securities are issued as part of the purchase
consideration for a public target - correct answer ✔C) II and IV
When a public acquirer issues shares as part of the purchase consideration
for a public target, the acquirer is typically required to file a registration
statement/prospectus (S-4) in order for those shares to be freely tradable by
the target's shareholders. Similarly, if the acquirer is issuing public debt
securities (or debt securities intended to be registered) to fund the purchase, it
must also file a registration statement/prospectus. The registration
statement/prospectus contains the terms of the issuance, material terms of
the transaction, and purchase price detail. It may also contain acquirer and
target financial information, including on a pro forma basis to reflect the
consummation of the transaction (if applicable, depending on the materiality of
the transaction).
Why might a seller choose to pursue a dividend recapitalization rather than a
sale of the company?
, I. Potential buyers are sidelined
II. It preserves equity upside to share in future growth
III. It increases the company's equity value
IV. Favorable debt capital markets - correct answer ✔C) I, II, and IV only
In a dividend recap, the company issues debt to pay a dividend to existing
shareholders.
This is an alternative to an outright sale in a scenario where there are no
buyers available, the seller wants to unlock additional value before a sale, or
when the cost of borrowing is relatively cheap. Additional leverage does not
increase equity value. Assuming a fixed enterprise value, it actually decreases
equity value.
Based on demand for an IPO, the underwriter would like to exercise the green
shoe clause. Which of the following is FALSE?
A) The green shoe clause can result in additional profit to the underwriter.
B) The issuer must approve before the green shoe can be exercised.
C) The green shoe clause is not required to be exercised in full.
D) The green shoe clause can be exercised if the stock is trading below the
IPO price. - correct answer ✔B) The issuer must approve before the green
shoe can be exercised. T
he green shoe clause allows the underwriter to increase the size of the deal
by up to 15% to satisfy demand. It can be exercised in full or in part and can
be exercised at any price (even though it is likely exercised with the stock is
trading above the IPO price). Once the green shoe is disclosed in the
prospectus the issuer does not get to approve of its exercise - it is at the
discretion of the underwriter.
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