Series 79 Example Questions
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Sample Questions
1)
What clause is built into underwriting agreements to protect a new issue from the risk associated with setting the price of a new issue too low?
A ) Dynamic Pricing
B ) Greenshoe
C ) Brown Bag
D ) Market-out
See Answer
Answer: The Best Answer is B
Feedback: A Greenshoe clause is built into underwriting agreements for the purpose of protecting an issue from excessive demand as a result of setting the price of an offering too low. This clause allows the issuer to authorize up to 15% more shares in the event that demand exceeds supply with regard to a new issue.
2)
How long must an investor hold restricted securities which are issued by a company not regulated by the reporting requirements of the Securities Exchange Act of 1934?
A ) 6 months
B ) 1 year
C ) 2 years
D ) 18 months
See Answer
Answer: The Best Answer is B
Feedback: If the securities are issued by a company not subject to the reporting requirements of the Securities Exchange Act of 1934, the restricted securities must be held for at least one year.
3)
You are in a bidding contest, advising the buyer. What can you tell the buyer that will help them improve their offer but will not cost more and will leave them maximum flexibility?
A ) Offer a lower multiple
B ) Offer a higher multiple
C ) Rapid time to close
D ) Offer more cash up front, less at closing
See Answer
Answer: The Correct Answer is C
Feedback: An acquirer could sweeten its offer for a target company without increasing its price by offering a short time to close.