Series 79 practice questionmediumStabilization
Which of the following accurately describes a penalty bid in the context of post-offering stabilization?
- AReclaim selling concessions from syndicate members whose customers quickly flip shares✓ Correct answer
- BA bid placed above the offering price to support the share price
- CA requirement for syndicate members to purchase unsold shares at the end of the offering
- DA bid submitted by the issuer to support trading volume
Explanation
Why A — Reclaim selling concessions from syndicate members whose customers quickly flip shares
A penalty bid allows the underwriter to reclaim concessions from members whose clients quickly sell shares, discouraging flipping. Bids above the offering price or issuer-placed bids are not allowed under regulations.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 995+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Underwriting & New Financing questions
- An affiliate of a public company wants to sell restricted stock under Rule 144. Which must be met for the sale to…
- Which document typically defines the economic terms and profit-sharing arrangement among underwriters in an IPO…
- What is the primary purpose of the green shoe (overallotment) option in an underwriting agreement?
- A company files a shelf registration statement for $500 million in securities. Which of the following best describes an…
- A preliminary prospectus used during the cooling-off period must display which legend on its cover?
- Which of the following is a key element of the due diligence defense for underwriters under Section 11?
- Which of the following is NOT a typical element of an underwriter’s due diligence process for a public offering?
- During a quiet period following an initial public offering, what is the primary purpose of prohibiting research reports…