RFP (Request for Proposal) correct answers An RFP is an invitation by an issuer to submit a proposal, via a competitive process, to complete for the lead underwriting role or participation in an offering. The potential underwriters will present financing scenarios, as well as a term sheet and fee p...
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RFP (Request for Proposal) correct answers An RFP is an invitation by an issuer to submit a
proposal, via a competitive process, to complete for the lead underwriting role or participation in
an offering. The potential underwriters will present financing scenarios, as well as a term sheet
and fee proposal as part of the RFP.
FINRA defines an institutional investor to include any entity with total assets of at least correct
answers $50mm
In underwriting, a competitive bid is generally used by:
A) by primary dealers when purchasing government securities in Treasury auctions
B) for all corporate securities offerings
C) only in secondary offerings
D) by underwriters to transfer the risk to the issuer correct answers A
Spread Formula correct answers Full takedown + manager's fee
What is included in full takedown? correct answers Underwriting fee, selling concessions
In the sale of new securities, the practice of making allotments to customers only if such
customers agree to make an additional purchase in the open market after the issue is initially sold
is
I. Prohibited
II. Not prohibited
III.Known as a tie-in agreement
IV. Known as a matched purchase correct answers 1 & 3
Standby Commitment correct answers a type of firm commitment underwriting that applies when
additional shares are issued, and current shareholders have pre-emptive rights. In this
arrangement, the securities are offered to the public for a 2- to 4- week standby period. The
underwriter will purchase for resale any of the shares that are not subscribed to during the
standby period.
Selected Dealer Agreement correct answers A selected dealer agreement is used between the
underwriter or syndicate and selling group members. The selling group assists in the selling of
new securities without financial responsibility for any of the unsold issue
When syndicate members purchase securities from the managing underwriter they pay the
correct answers Takedown Price
Primary Offering correct answers New shares available in a public offering that increase the total
number of shares in the company
Secondary Offering correct answers Shares pre-exist, they were owned by others that are now
cashing out some of their previous interest
, Agreement Among Underwriters (AAU) correct answers Establishes terms among the syndicate
members, including appointing the managing underwriter, assigning allocations
Underwriting Agreement correct answers Between the issuer and the syndicate manager
In an underwriting of corporate securities, the partial takedown correct answers Compensates the
selling group for selling shares and is equal to the selling concession
Regulation M purpose correct answers Prevents manipulation of share price before the effective
date of a new offering
When subject to a restricted period under Regulation M, a firm seeking an excused withdrawal
must make this request correct answers 1 business day prior to the first complete trading session
of the restricted period
When must a final syndicate settlement take place? correct answers Within 90 days of the
syndicate settlement date (issuer delivering securities to syndicate members)
Under the FINRA corporate finance rule, underwriters receiving shares as compensation are
required to hold them for how long before they can be sold? correct answers 180 days
According to Regulation M, the restricted period for distributors of a common stock with an
ADTV value of less than $100,000 and a public float of less than $25 million begins correct
answers 5 business days before pricing
According to Regulation M, the restricted period for distributors of a common stock with an
ADTV value of more than $100,000 and a public float of more than $25 million begins correct
answers 1 business days before pricing
Under Regulation M, the DEFAULT restricted period begins correct answers 5 business days
before pricing
Regulation M requires underwriters to notify FINRA in writing of their restricted period
determination. This notice must include which of the following items?
I. Restricted distribution participants and their affiliates
II. Intent to engage in stabilizing trading
III. Intent to impose a penalty bid
IV. Allocations of shares to each underwriter correct answers I, II, III
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