Series 79 practice questionhardDue Diligence Defense
Which of the following steps best demonstrates an underwriter’s reasonable investigation for Section 11 due diligence purposes?
- AReviewing management representations, financial statements, and independent expert reports✓ Correct answer
- BRelying solely on the CEO's oral assurances
- CAssuming prior successful offerings indicate current accuracy
- DDelegating all investigation to junior analysts
Explanation
Why A — Reviewing management representations, financial statements, and independent expert reports
Reasonable investigation requires active review of multiple sources, including financials and expert opinions. The trap is thinking oral assurances or delegation alone suffice for due diligence.
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
- Under Rule 172, how is final-prospectus delivery generally satisfied for a registered offering?
- During an IPO roadshow, which action creates the clearest Section 12(a)(2) risk?
- Which of the following is true regarding stabilization activities under Regulation M in a public offering?
- In book-building for an IPO, which allocation practice could expose an underwriter to regulatory scrutiny for spinning?
- A preliminary prospectus is delivered to an investor. Which of the following must be clearly indicated on its cover?
- An issuer that is eligible for short-form registration wants to register a follow-on offering after its IPO. Which form…
- In a Regulation D Rule 506(b) offering, what is the consequence if more than 35 non-accredited investors participate?
- Which SEC form is typically used for the initial public offering (IPO) of equity securities by a U.S. company?