Series 79 Questions || A+ Guaranteed.
In order to qualify as a WKSI, an issuer must have a non-affiliate market capitalization of at
least: correct answers $700 million worldwide
An investment analyst is evaluating a company that formerly was public, before being taken
private in a merger. This company has not filed any 10-Ks or 10-Qs since it went private. To
learn details of the consideration paid to acquire this company, an analyst should consult which
document? correct answers The merger proxy
Can a company's board of directors' request that a fairness opinion be held in confidence i.e.,
shared only with the board, not with shareholders? correct answers Yes, it may be kept
confidential. No disclosures are required
Who is required to sign-off on the final registration statement, after any deficiencies have been
addressed? correct answers I. Corporate officers of the issuer
II. Underwriters
If a company's taxable income is higher than its book- reported income what impact will it have
on the company's financial statements? correct answers Creation of a Deferred Tax Asset
Why might a buyer prefer an asset sale to a stock sale? correct answers Tax benefits
FINRA issued a no-objection comment letter on March 18 to a member firm that wishes to
participate in a distribution of new-issue REIT securities. If another FINRA member agrees to
become an underwriter and distribute the same securities after March 18, what must it do?
correct answers Nothing
The specific agreement governing a selling group's duties in a new issue is called the correct
answers Selected dealer agreement
Under FINRA Rule 2111, which of the following entities would be considered an "institutional
customer" for purposes of gathering customer suitability information? correct answers II.
Insurance company
III. Individual with assets of $60 million
IV. Bank
An individual can be an institution, if total assets are at least $50 million. A pension fund,
foundation or endowment is not considered an institution unless it has assets of at least $50
million.
A primary source for locating a company's SEC filings would be correct answers EDGAR
What is the maximum number of accredited investors allowed in a private placement offering?
correct answers There is no limit
, In which M&A document is the break-up fee detailed? correct answers Definitive agreement
What is the maximum size of a Rule 147 offering in terms of dollars raised and investors who
participate? correct answers No limit on dollars raised or number of investors
Which of the following types of entities pays federal income tax on IRS Form 1120? correct
answers C corporation
An issuer initiates a tender offer in which it states a range of prices in which tenders will be
accepted and a number of shares it wishes to acquire. All accepted bids will receive the same
share price, the "clearing bid." This type of offer is called correct answers Dutch auction
Which of the following are helpful sources for creating a universe of comparable companies for
a given private company? correct answers Investor presentation for a clear public comparables
company
Fairness opinions for comparable companies
A research analyst who participates in a non-deal road show is not allowed to communicate with
customers correct answers In the presence of investment bankers or representatives of the
securities issuer
when are financials outdated for WKSIs and when are they outdated for seasoned issuers?
correct answers Financials are considered outdated after 130 days for WKSIs and seasoned
issuers and 135 days for all other issuers.
A fairness opinion is commissioned by the board of directors of the selling firm. What is true
about the dissemination of the fairness opinion? correct answers An acquirer and its buy sider
adviser do not review or preview a fairness opinion.
SEC Rule 14-e requires the target company in a tender offer to give security holders a statement
of its position on the offer. Which of the following is TRUE about this statement? correct
answers It may state that the target company is unable to take a position.
Who is responsible for ensuring that an investor does not exceed the annual limit (for individual
investors) on crowdfunding investment in a calendar year? correct answers The intermediary
Company F has $1,000,000 of 10% 30 year bonds outstanding with a current yield of 10.5%. The
company refinances all $1,000,000 to a 7% rate. Assuming a marginal tax rate of 40%, what is
the annual increase to Company F's net income? correct answers Correct Answer - 18,000
When Company F refinances a 10% bond to 7% it realizes an annual interest savings of 3% x
$1,000,000 = $30,000. Company F will be required to pay additional taxes on this savings, so the
after-tax impact to net income = $30,000 x (1 - tax rate) = $30,000 x 60% = $18,000. The current
yield is not relevant to this question.
In order to qualify as a WKSI, an issuer must have a non-affiliate market capitalization of at
least: correct answers $700 million worldwide
An investment analyst is evaluating a company that formerly was public, before being taken
private in a merger. This company has not filed any 10-Ks or 10-Qs since it went private. To
learn details of the consideration paid to acquire this company, an analyst should consult which
document? correct answers The merger proxy
Can a company's board of directors' request that a fairness opinion be held in confidence i.e.,
shared only with the board, not with shareholders? correct answers Yes, it may be kept
confidential. No disclosures are required
Who is required to sign-off on the final registration statement, after any deficiencies have been
addressed? correct answers I. Corporate officers of the issuer
II. Underwriters
If a company's taxable income is higher than its book- reported income what impact will it have
on the company's financial statements? correct answers Creation of a Deferred Tax Asset
Why might a buyer prefer an asset sale to a stock sale? correct answers Tax benefits
FINRA issued a no-objection comment letter on March 18 to a member firm that wishes to
participate in a distribution of new-issue REIT securities. If another FINRA member agrees to
become an underwriter and distribute the same securities after March 18, what must it do?
correct answers Nothing
The specific agreement governing a selling group's duties in a new issue is called the correct
answers Selected dealer agreement
Under FINRA Rule 2111, which of the following entities would be considered an "institutional
customer" for purposes of gathering customer suitability information? correct answers II.
Insurance company
III. Individual with assets of $60 million
IV. Bank
An individual can be an institution, if total assets are at least $50 million. A pension fund,
foundation or endowment is not considered an institution unless it has assets of at least $50
million.
A primary source for locating a company's SEC filings would be correct answers EDGAR
What is the maximum number of accredited investors allowed in a private placement offering?
correct answers There is no limit
, In which M&A document is the break-up fee detailed? correct answers Definitive agreement
What is the maximum size of a Rule 147 offering in terms of dollars raised and investors who
participate? correct answers No limit on dollars raised or number of investors
Which of the following types of entities pays federal income tax on IRS Form 1120? correct
answers C corporation
An issuer initiates a tender offer in which it states a range of prices in which tenders will be
accepted and a number of shares it wishes to acquire. All accepted bids will receive the same
share price, the "clearing bid." This type of offer is called correct answers Dutch auction
Which of the following are helpful sources for creating a universe of comparable companies for
a given private company? correct answers Investor presentation for a clear public comparables
company
Fairness opinions for comparable companies
A research analyst who participates in a non-deal road show is not allowed to communicate with
customers correct answers In the presence of investment bankers or representatives of the
securities issuer
when are financials outdated for WKSIs and when are they outdated for seasoned issuers?
correct answers Financials are considered outdated after 130 days for WKSIs and seasoned
issuers and 135 days for all other issuers.
A fairness opinion is commissioned by the board of directors of the selling firm. What is true
about the dissemination of the fairness opinion? correct answers An acquirer and its buy sider
adviser do not review or preview a fairness opinion.
SEC Rule 14-e requires the target company in a tender offer to give security holders a statement
of its position on the offer. Which of the following is TRUE about this statement? correct
answers It may state that the target company is unable to take a position.
Who is responsible for ensuring that an investor does not exceed the annual limit (for individual
investors) on crowdfunding investment in a calendar year? correct answers The intermediary
Company F has $1,000,000 of 10% 30 year bonds outstanding with a current yield of 10.5%. The
company refinances all $1,000,000 to a 7% rate. Assuming a marginal tax rate of 40%, what is
the annual increase to Company F's net income? correct answers Correct Answer - 18,000
When Company F refinances a 10% bond to 7% it realizes an annual interest savings of 3% x
$1,000,000 = $30,000. Company F will be required to pay additional taxes on this savings, so the
after-tax impact to net income = $30,000 x (1 - tax rate) = $30,000 x 60% = $18,000. The current
yield is not relevant to this question.
