AD678 Financial Regulation and Ethics Sample Midterm Questions
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AD678 Financial Regulation and Ethics
Sample Midterm Questions
1. Which of the following does not raise capital for the issuer?
(a) Initial Public Offering (IPO).
(b) Securities trading of already issued securities.
(c) Private placement of debt issues.
(d) Issue of preferred stock to venture capitalists.
Correct answer: (b) Securities trading of already issued securities.
2. Securities markets serve which functions?
(a) Risk management.
(b) Liquidity.
(c) Capital Formation.
(d) All of the above.
Correct answer: (d) All of the above.
3. The SEC commissioners are
(a) Elected by the state legislatures.
(b) Appointed by the President of the United States.
(c) Selected by the House of Representatives.
(d) None of the above.
Correct answer: (b) Appointed by the President of the United States
4. The following actions are allowed during the pre-filing period of an IPO: (a) An offer to sell a security to customers known to the underwriter.
(b) An offer to buy a security at a predetermined price.
(c) An announcement regarding the issuer’s intent to sell the security along with the type and timing.
(d) All of the above.
Correct answer: (c) An announcement regarding the issuer’s intent to sell the security along with the type and timing.
5. The following is not an accredited investor:
(a) The family office of Joseph P. Smith,
(b) Bank of England
(c) A retail investor with a brokerage account of $250,000 in Keystone Trading, LLC.
(d) New England Insurance Co.
Correct answer: (c) A retail investor with a brokerage account of $250,000 in Keystone Trading, LLC.
6. New England Therapeutics would like to raise $100 million in a private placement to fund their research program. The following options are available to the company:
(a) Reg A+ [ Tier 2]
(b) Reg CF (Crowdfunding)
(c) Reg 506
(d) Reg 504
Correct answer: (c) Reg 506
7. New England Therapeutics decided to downsize the offering and to raise $15 million instead in the private placement. They are considering the following options:
(1) Reg CF (2) Reg A+ [Tier 1] (3) Rule 504 [Reg D]
As an adviser, which of the following options are available to the company?
(a) (1) and (3)
(b) (2) only
(c) (2) and (3)
(d) All of the above.
Correct answer: (b) (2) only
2023-02-28