TEAS Reading: Key Ideas and Details (Quiz 1) Welcome to your SIE Practice Quizzes. Note: We designed four (4) sets of practice quizzes for each Domain. each quiz set has 25 questions. Domain 2 (Set 3): Knowledge of Capital Markets. (25 questions) Please click NEXTÂ to start your Free SIE Practice Quizzes right away. Best of Luck! 1. SIE, Knowledge of Capital Markets,SIE Regarding the purchase of a new equity issue, an account where a restricted person has a beneficial interest would be allowed to purchase the new shares at the public offering price A) without restriction. B) never. C) only if the interest exceeds 15%. D) only if the interest does not exceed 10%. None 2. SIE, Knowledge of Capital Markets,SIE Which of the following choices would best describe a follow-on offering? A) An initial public offering (IPO) that has additional shares added by the issuer on the effective date B) An offering to the employees of the issuing company C) The common stock that is issued attached to a rights offering D) An issue of shares by a public company that is already listed on an exchange None 3. SIE, Knowledge of Capital Markets,SIE When choosing to issue additional bonds to the general public in order to raise more capital, a corporate issuer is engaging in A) a secondary offering. B) an initial public offering. C) a primary offering. D) a private securities offering. None 4. SIE, Knowledge of Capital Markets,SIE Which of the following offerings is most likely exempt from the registration requirements of the Securities Act of 1933? A) Additional public offerings (APOs) B) Private (nonpublic) securities offerings C) Shelf offerings D) Initial public offerings (IPOs) None 5. SIE, Knowledge of Capital Markets,SIE The Securities Act of 1933 protects investors who buy new issues by doing all of the following except A) regulating the underwriting and distribution of primary and secondary issues. B) requiring an issuer to provide full and fair disclosure. C) requiring the licensing of persons affiliated with broker-dealers. D) providing criminal penalties for fraud in the issuance of new securities. None 6. SIE, Knowledge of Capital Markets,SIE Rules regarding restricted persons state that each of the following is considered immediate family except A) parents. B) a brother or a sister. C) a mother-in-law or a father-in-law. D) an aunt or an uncle. None 7. SIE, Knowledge of Capital Markets,SIE In a split offering, A) shares are issued from the corporation and sold by existing shareholders. B) shares are issued to existing shareholders only. C) shares are sold by existing shareholders only. D) all shares are issued to the public from existing shareholders. None 8. SIE, Knowledge of Capital Markets,SIE Under the de minimis exemption, an initial public offering of common stock may be sold to an account where restricted persons have a beneficial interest as long as their interest in the account does not exceed A) 20%. B) 10%. C) 25%. D) 5%. None 9. SIE, Knowledge of Capital Markets,SIE Raising funds is generally accomplished by corporations through the issuance of stock (equity) or bonds (debt). This is done in A) the funding market. B) the secondary market. C) the currency market. D) the capital market. None 10. SIE, Knowledge of Capital Markets,SIE Restricted persons are not allowed to purchase an IPO of common stock. All of the following are restricted persons except A) broker-dealers. B) any person owning 10% or more of a member firm. C) registered representatives. D) the grandparent of a restricted person. None 11. SIE, Knowledge of Capital Markets,SIE Mrs. Jones is an employee of a member firm and as such is a restricted person regarding the purchase of new issues. She belongs to an investment club and has a 1% interest in the club's brokerage account. The investment club A) is a restricted account and will not be allowed to purchase equity shares of an IPO. B) is a restricted account but will be allowed to purchase equity shares of an IPO. C) is not a restricted account but will not be allowed to purchase equity shares of an IPO. D) is not a restricted account and will be allowed to purchase equity shares of an initial public offering (IPO). None 12. SIE, Knowledge of Capital Markets,SIE A corporation increases capitalization by selling shares of stock which can either come from a new issue or previously authorized but unissued shares. Total stock outstanding must A) never equal the number of shares issued. B) always equal the number shares authorized. C) always be greater than the number of shares issued. D) never exceed the number of shares authorized. None 13. SIE, Knowledge of Capital Markets,SIE Six days into the cooling-off period, an issuer receives a deficiency letter from the Securities and Exchange Commission (SEC) requesting clarification and corrections. Once the issuer submits these, and assuming that they satisfy the deficiency, the cooling-off period will resume. With no other deficiencies arising, the issue should become effective in A) 8 days. B) 15 days. C) 20 days. D) 14 days. None 14. SIE, Knowledge of Capital Markets,SIE A tombstone advertisement would be expected to include all of the following information except A) the price or price range at which the securities are expected to be offered. B) an advisory that the advertisement is neither an offer to sell nor a solicitation of an offer for any of these securities. C) any inherent risks associated with the offering or the issuer offering the securities. D) the name of the issuer and underwriters if they are being used to assist in the offering. None 15. SIE, Knowledge of Capital Markets,SIE Which of the following situations may not be disclosed to a potential buyer while a security is in registration? A) There will be a road show in New York City in May. B) The issue is being offered through ABC Investment Bank. C) The issue is expected to be priced in early June. D) A brokerage report shows the security is properly undervalued. None 16. SIE, Knowledge of Capital Markets,SIE A final prospectus contains all of the following except A) the use of the proceeds. B) history of the business. C) description of the management. D) SEC approval. None 17. SIE, Knowledge of Capital Markets,SIE If it finds that the registration statement needs revision, expansion, or to have corrections made, the Securities and Exchange Commission (SEC) may suspend the review of the new issue and issue a deficiency letter. Once the issuer submits a corrected registration statement, the 20-day cooling-off period A) begins anew. B) considered over allowing the registration to be effective. C) is increased by 10 business days to accommodate review of the new information. D) resumes where it had left off. None 18. SIE, Knowledge of Capital Markets,SIE Which of the following would be allowed during the cooling off period? A) Allocating shares to investors B) Distributing a prospectus C) Taking orders D) Taking indications of interest None 19. SIE, Knowledge of Capital Markets,SIE State registration is not required if the transaction is exempt. An example of an exempt transaction would be A) one involving municipal bonds. B) one that is solicited. C) one that is unsolicited. D) one involving U.S. government bonds. None 20. SIE, Knowledge of Capital Markets,SIE Regarding the issuance of new securities to the public, which of the following is true? A) The Securities and Exchange Commission (SEC) review of a new issues filing must always be longer than 20 days. B) The Securities Act of 1933 provides criminal penalties for fraud. C) Underwriters are permitted to accept orders for securities during the Securities and Exchange Commission (SEC) review period. D) Registrations become effective within 10 business days of Securities and Exchange Commission (SEC) filing. None 21. SIE, Knowledge of Capital Markets,SIE During the cooling-off period, underwriters may not A) distribute sales literature or advertising material. B) place a tombstone advertisement. C) distribute a preliminary prospectus. D) take indications of interest. None 22. SIE, Knowledge of Capital Markets,SIE After the issuer files a registration statement with the Securities and Exchange Commission (SEC), the time known as the cooling-off period begins. This allows a registration to become effective as early as A) 20 calendar days after the date the SEC has received it. B) 20 business days after the date the SEC has received it. C) 40 business days after the date the SEC has received it. D) 40 calendar days after the date the SEC has received it. None 23. SIE, Knowledge of Capital Markets,SIE After the filing of a registration for a new issue with the Securities and Exchange Commission (SEC), and still in the registration's cooling-off period, broker-dealers may A) give a red herring to prospective investors. B) distribute sales literature with the preliminary prospectus. C) never publish tombstone advertisements. D) take binding indications of interest received from prospective investors. None 24. SIE, Knowledge of Capital Markets,SIE When an investor receives a final prospectus, the expectation should be that one of the following would not be found. Which is it? A) the intended use of the proceeds raised in the offering B) all known risks to purchasers of the stock C) the Securities and Exchange Commission's (SEC's) verification of accuracy D) the effective or offering date None 25. SIE, Knowledge of Capital Markets,SIE The prospectus delivery requirement, access equals delivery, is satisfied when A) the final prospectus has been filed with the Securities and Exchange Commission (SEC) and is available on the SEC's website for investors to see. B) a red herring is initially sent by mail to investors during the cooling-off period. C) the preliminary prospectus has been filed with FINRA and is therefore available on FINRA's website for investors to see. D) the final prospectus has been filed with Financial Industry Regulatory Authority (FINRA) and is available on FINRA's website for investors to see. None 1 out of 25 Time is Up! Time's up
