Series 79 Exams || All Answers Are Correct 100%.
When a customer requests access to FINRA's rule manual, it is permissible for the firm to correct
answers 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 answers Corporate insiders owning more than 10 % of company's
securities
All customers must receive written statements of account no less than correct answers 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 answers II and III
In which of the following situations would it be appropriate for a registered representative to
lend money to a client? correct answers 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 answers 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 answers 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 answers 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 answers
Just prior to Board approval and execution of the definitive agreement
,Mini-max and firm commitment correct answers 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 answers 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
answers 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 answers 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 answers 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 answers 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.
Company A enters into a definitive agreement to purchase Company B. Immediately after
signing the Definitive Agreement, the two companies issue a joint press release announcing the
, transaction. Which of the following is true regarding this action? correct answers Under SEC
Rule 425, communications regarding a business combination transaction may be distributed to
the public, but are defined as a prospectus and must be filed with the SEC no later than the date
of first use.
The Termination Provisions of the Definitive Agreement detail the circumstances under which
one party may terminate correct answers the agreement rather than complete the deal. In some
circumstances, one party may owe a termination fee ("breakup fee") to the other party. Examples
include:
• if the seller terminates the deal to take a better offer, the seller pays a breakup fee to the buyer
• if the seller terminates because the buyer cannot come up with financing, the buyer may owe a
breakup fee to the seller
The circumstances under which one party may terminate the agreement are clearly defined.
Business trends do not typically constitute grounds for termination and receipt of a break-up fee
post-signing.
Jones Securities, Inc. is the lead underwriter for NewCo, which plans to sell 5 million shares of
stock to the public at an offering price of $27.00 per share. The manager's fee is $.25, the
underwriting fee is $.20 and the full takedown is $.85. Jones Securities successfully places 20%
of the issue, with the remaining securities sold by other underwriters. What is the total
compensation to Jones Securities? correct answers The total spread is the manager's fee of $.25
plus the $.85 full takedown, for a total of $1.10. The underwriting fee is a component of the full
takedown, so is not taken into account in the calculation. As the syndicate manager, Jones
Securities receives the full spread for the 1 million shares it sells and the manager's fee of $.25
for the remaining 4 million shares:
1 million shares x $1.10 = $1.1 million
4 million shares x $.25 = $1.0 million
Total = $2.1 million
In order to start doing business as a broker dealer, a firm must correct answers have
appropriately qualified associated persons, must have filed Form BD, satisfied appropriate state
requirements and become a member of SIPC and an SRO. Registration with the SEC, not
approval from the SEC, is required to begin business as a broker-dealer.
SEC Regulation M, Rule 100, defines the principal market as having correct answers he largest
aggregated reported trading volume for the class of securities during the full 12 calendar months
immediately preceding the filing of the registration.
n affiliate must file notice with the SEC on Form 144 if correct answers e/she wishes to sell
5,000 shares or $50,000 in aggregate in any three-month period. In addition, the sale must take
place within three months of filing the Form.
The valuation analysis in a fairness opinion typically includes correct answers Comparable
companies, precedent transactions, DCF analysis, and LBO analysis (if applicable), as well as
other relevant industry and share price performance benchmarking analyses, including premiums
