Free SERIES 7 Exam Braindumps (page: 34)

Page 33 of 101

In the offering of new securities, members of the syndicate are permitted to sell to other dealers less the reallowance. The amount of the reallowance is determined by:

  1. the FINRA
  2. the issuing corporation
  3. the syndicate manager
  4. the SEC

Answer(s): C

Explanation:

the syndicate manager. The reallowance as well as the selling concession given to selling group members are determined by the managing underwriters.



Under Rule 415 a corporation may file a single registration statement with the SEC covering its anticipated financing need for the next:

  1. one year
  2. two years
  3. three years
  4. five years

Answer(s): B

Explanation:

two years. The corporation can offer these securities in whole or in part for the ensuing two years.



Bubba has been classified as a restricted person according to Rule 2790. He may purchase equity securities of an IPO except:

  1. to purchase securities to avoid dilution
  2. when the new issue of securities is purchased pursuant to a stand-by agreement
  3. when the transaction is exempt by an order of the FINRA
  4. when the new issue of securities is purchased pursuant to a best effort basis

Answer(s): D

Explanation:

when the new issue of securities is purchased pursuant to a best effort basis. All the other choices are allowable under the rule “except” this one.



An ERISA benefits plan qualified under Section 401(a) of the Internal Revenue Code may:

  1. purchase any IPO security provided the plan is not sponsored solely by a broker/dealer
  2. apply for an exemption
  3. only purchase securities rated “A” or better
  4. purchase only securities issued by the state or federal government

Answer(s): A

Explanation:

purchase any IPO security provided the plan is not sponsored solely by a broker/dealer. An ERISA plan that is qualified under Section 401(a) may purchase any IPO security provided that the plan sponsor is not a broker/dealer.






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