Free SERIES 7 Exam Braindumps (page: 40)

Page 39 of 101

Which of the following is not found in the final prospectus?

  1. a statement as to possible stabilization by the manager
  2. the public offering price
  3. a copy of the underwriting agreement
  4. a statement that the SEC neither approves nor disapproves of the issue

Answer(s): C

Explanation:

a copy of the underwriting agreement. The underwriting agreement is “not” in the final prospectus. This is a contract between the issuer and the underwriting syndicate.



Under which of the following conditions may a registered representative of a firm that is an underwriter of a new offering of common stock send to a client a copy of the firm’s research report on that stock?

  1. if it is accompanied by a red herring
  2. if he has permission of his employer
  3. if his firm is not the managing underwriter
  4. under no circumstances

Answer(s): D

Explanation:

under no circumstances. The representative may send the red herring but not a research report of his firm.



With respect to the public offering of securities by an underwriting syndicate, which of the following is true?

  1. the underwriting spread is greater than the selling concession
  2. the reallowance is greater than the selling concession
  3. the selling concession is greater than the underwriting spread
  4. the reallowance is greater than the underwriting spread

Answer(s): A

Explanation:

the underwriting spread is greater than the selling concession. The underwriting spread (or “gross spread”) is the difference between the price paid to the issuer and the public offering price. The selling concession is the amount that the managing underwriter gives to dealers in the selling group. The reallowance is the amount that underwriters give to other dealers and is less than the selling concession.



Regulation A permits a short form of filing for offerings of new securities provided the total amount of the offering does not exceed:

  1. $1,000,000
  2. $5,000,000
  3. $2,000,000
  4. $2,500,000

Answer(s): B

Explanation:

$5,000,000. This is the maximum under Regulation A.






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