Free SERIES 7 Exam Braindumps (page: 41)

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Which of the following would not normally be a function of an investment banker?

  1. providing short-term capital needs to client companies
  2. underwriting new issues of securities
  3. providing long-term capital needs to client companies
  4. assisting in large secondary offerings of securities

Answer(s): A

Explanation:

providing short-term capital needs to client companies. The short-term capital needs of companies are normally the function of commercial bankers, not investment bankers.



A public offering by an investment banker in which any securities not sold are returned to the issuer is known as:

  1. a firm commitment
  2. a best efforts offering
  3. an all or none offering
  4. a contingency offering

Answer(s): B

Explanation:

a best efforts offering. With a best efforts offering the investment banker does not make any guarantee that all the offered securities will sell. The investment banker pays for only those securities that are actually sold and returns unsold shares to the issuer.



To qualify as an intrastate offering under SEC Rule 147, which of the following is true of the issue?

  1. it must be approved by the SEC
  2. it must be sold only to bona fide residents of one state
  3. it cannot exceed $1,500,000 in value
  4. it must consist of common stock only

Answer(s): B

Explanation:

it must be sold only to bona fide residents of one state. Under Rule 147 intrastate offerings are sold only to residents of one state and cannot be sold outside that state for nine months. All the other choices are incorrect about the rule.



Which of the following does not affect the public offering price of a new issue?

  1. anticipated earnings of the issuer in the next year
  2. dividend projections for the next year
  3. the book value of the issuer
  4. the selling group’s determination of value in the prevailing market conditions

Answer(s): D

Explanation:

the selling group’s determination of value in the prevailing market conditions. The offering price is determined by factors related to the issuer.






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