Ch 2 Deck 5

Question 1

The issuer issues 15% more shares at the firm commitment price that the underwriter can use to cover its overallotment sale

Answer 1

Green shoe option

Question 2

Green shoe option is also called

Answer 2

overallotment option

Question 3

The green shoe option keeps the underwriter from having to

Answer 3

purchase higher priced shares at the market price and covering at a loss

Question 4

The green shoe option is contained in

Answer 4

the underwriting agreement

Question 5

If the underwriter does need to cover its short position at a loss

Answer 5

the underwriters share the loss among them pro-rata

Question 6

Option 1/2 for qualifying as a WKSI is a worldwide

Answer 6

public float (not held by affiliates) of $700M in common equity

Question 7

Option 2/2 for qualifying as a WKSI is having non-convertible debt

Answer 7

in the amount of $1B in the past 3 years

Question 8

WKSI’s can file FWP’s in

Answer 8

the pre-filing period

Question 9

WKSI’s can file registration statements on

Answer 9

the much abbreviated S-3 form

Question 10

WKSI’s can file automatic

Answer 10

shelf registration statements

Question 11

Automatic shelf registrations become effective

Answer 11

immediately upon filing

Question 12

Shelf registrations allow unlimited shares for a period of

Answer 12

up to 3 years

Question 13

Is SEC review required for shelf registrations?

Answer 13

No

Question 14

WKSI

Answer 14

Well-known seasoned issuer

Question 15

Two options for qualifying as a seasoned issuer

Answer 15

Public float of $75M
OR
Listed on a national securities exchange

Question 16

Seasoned issuers can file

Answer 16

Abbreviated S-3 forms

Question 17

Unseasoned reporting issuers have public float

Answer 17

Public float under $75M

Question 18

Unseasoned reporting issuers file registrations with

Answer 18

S-1

Question 19

Issuers judged as ineligible by the SEC

Answer 19

Ineligible Issuer

Question 20

Reasons for being judged an ineligible issuer

Answer 20

–Not current in their reports
–Shell companies

–Penny stock issuers
–Issuers that have violations

Question 21

registration form for follow-on offerings involving WKSI and Seasoned Issuers

Answer 21

S-3

Question 22

Registration form for IPOs

Answer 22

S-1

Question 23

Registration form for issuers other than WKSI and Seasoned Issuers

Answer 23

S-1

Question 24

Registration statement for mergers (also called business combinations)


Answer 24

S-4

Question 25

Registration statement for Employee Stock Purchase plans

Answer 25

S-8

Question 26

Registration statement for real estate investment companies

Answer 26

S-11

Question 27

Affliates are

Answer 27

officers directors, those who own at least 10% of the company

Question 28

public float is

Answer 28

securities not held by affiliates

Question 29

non reporting issuers are those

Answer 29

not required to file reports under exchange act, meaning they have never yet issued securities. This issue will be an IPO.

Question 30

non reporting issuers file with an

Answer 30

s-1

Question 31

Ineligible issuers are unable to take advantage of

Answer 31

relaxed communications rules (forward looking statements in research reports)

Question 32

S-3 is always for

Answer 32

follow on offerings

Question 33

Business combinations must be registered because

Answer 33

purchases are made with shares, requiring the issuing of new shares