Exam 3 Final Exam Topics

Restricted person

Restricted person

Any employee of a BD as well as any immediate family members of the employee (spouse, Children, parents, siblings, in-laws, and any others persons who are materially supported by an employee of a member firm)

Who is excluded from the rule ?

Uncles, aunts, cousins, grandparents, and ex-spouses of the registered representative

Most reporting issuers must have

At least one financial expert serving on its audit committee

Successfully reduced its working capital. What happened ?

Inventory levels have declined - a company that can carry a lower amount of inventory would realize a successful reduction in working Capital. BENEFICIAL conditions associated with a balance sheet measurements

Quick assets ratio (Acid Test Ratio)

(Cash + Cash Equivalents + accounts receivable / Current Liabilities)

Which of the following is TRUE regarding sales of a new issue by a SYNDICATE ?

The underwriting spread is larger than the selling concession. - The underwriting spread is larger because the selling concession is just one component of the underwriting spread

Reallowance in an underwriting

Compensation given to broker-dealers that are not members of the syndicate or selling group, but would like to participate in the new issue offering

ENTERPRISE VALUE

Market cap + LONG TERM DEBT - Cash and Cash equivalents

Assisting the Exeter corporation in an acquisition of Bristol.

Exec. Has 10 million shares outstanding (400 million market value)

Bristol has 4 million share outstanding with a market value of 80 million dollars

Bristol has greed to a buyout at its book value, with a recommendation that Ex. Issue 2 million shares of common stock to finance the acquisition.

WHAT IS THE EV OF THE COMBINED ENTITIES ?

MARKET capitalization + Long-term Debt - Cash and Cash equivalents = Enterprise Value

The value per share prior to the acquisition was $40 (400/10). The 2 million additional shares issued would bring the number of shares outstanding to 12 million. Therefore, the new market value of the shares outstanding $480 million.

Value of market capitalization of the combined shares outstanding 480

+long term debt = 135 million debt

-cash and cash equivalents 70 million

Enterprise value 545 million

In a one-step merger process the target company obtains approval from its shareholders through

A vote at a special meeting

Prior to the vote - the preliminary proxy is sent to the SEC, then defintive proxy is sent to shareholders

CASH TRANSACTIONS DO NOT REQUIRE AQUIRERS SHAREHOLDERS REQUIRED TO VOTE ON TEH PROPOSED TRANSACTION

Patents and brands are both

Intangible assets, also referred to “identifiable” because they have a finite useful life and will be amortized

IPO would NOT use a

Fairness opinions - provides the board of directors with information that is necessary to analyze a transaction