The Offering Process Self-Quiz








NewCo has decided to put together a public offering. It has begun organizing its books and has hired an investment banker in order to get the process underway. The next step that it should take is:
Choice 1 to look for buyers for its security.
Choice 2 to draft and submit a prospectus to the SEC.
Choice 3 to begin pricing the securities to determine if there is a market.
Choice 4 to hire a group of securities lawyers to ensure that sale proceeds quickly.
RH&Co. has prepared and submitted a prospectus to the SEC. The SEC responded to the prospectus by suggesting that the company had been a bit bold about its predictions for the company’s future. Thus, they have suggested that the company ought to reform its prospectus such that it does not have the effect of:
Choice 1 being overly optimistic.
Choice 2 conditioning the market.
Choice 3 committing fraud.
Choice 4 violating the securities laws.
Company R has just completed its financial filings in preparation for finalizing its prospectus. The preparation of the documents was completed in compliance with:
Choice 1 The CPA principles.
Choice 2 GAAP.
Choice 3 GARP.
Choice 4 the Financial Accounting Standards Principles.
JoeCo has prepared and distributed a prospectus to potential investors. However, the SEC has refused to grant the prospectus final approval. What is one of the most likely reasons why the firm would be denied final approval?
Choice 1 Not all potential investors in the company have been identified.
Choice 2 The prospectus fails to state a final price for the security.
Choice 3 The prospectus was not provided to all individuals who received an earlier copy.
Choice 4 The company's attorneys and CEO failed to sign the prospectus.
In its prospectus, management made several forward-looking statements. Those statements were most likely made in:
Choice 1 the MD&A.
Choice 2 the company's financial statements.
Choice 3 the company's statements about its operations.
Choice 4 the FASB.
A new exchange, sponsored by a group of individuals who want to form an exchange for the town of Missoula, Montana, have registered with the SEC to create their exchange. Under which of the following laws would the firm be registering?
Choice 1 The Exchange Traders Act of 1928.
Choice 2 The Securities Act of 1933.
Choice 3 The Securities Exchange Act of 1934.
Choice 4 The Market Reformation Act of 1972.
GoingStrong, Inc. has decided to engage in a share offering. In order to comply with the various securities laws for the offering, it will have to consult with the securities issuance laws for:
Choice 1 the Federal Government.
Choice 2 the state government where it is incorporated.
Choice 3 the state government where it does the bulk of its business or is headquartered.
Choice 4 all of the above.
Lev is a broker-dealer of several securities. In order to act as a broker-dealer for these companies, he must:
Choice 1 register with the companies whose shares he is trading.
Choice 2 inform his clients that he is only registered to deal in certain securities.
Choice 3 register with the SEC and pass qualifying exams to become a broker-dealer.
Choice 4 register with the state government where he works that he is a broker-dealer.
Ultimate liability for the material in a prospectus rests with:
Choice 1 the company's attorneys.
Choice 2 the company's board.
Choice 3 the company's bankers.
Choice 4 all of the above.
You are currently working as an attorney for the SEC in the prospectus review area. Which of the following looks most like “conditioning the market” to you?
Choice 1 “The company has had sound revenue growth over the last six quarters.”
Choice 2 “We expect costs in our shoe division to rise 10% in the next year.”
Choice 3 “Profits are expected to triple as buyers recognize the true potential of our product.”
Choice 4 “This security is being offered with the primary goal of raising funds for an acquisition we anticipate closing in the third quarter of the following year.”

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