SIE Exam Question 284: Answer and Explanation

Question: 284

All of the following are true of the syndicate when bringing a new equity security to the market EXCEPT

• A. They take some of the financial burden off of the lead underwriter.
• B. They cannot back out of the underwriting agreement during the cooling off period.
• C. The can sell their entire allotment of the new issue.
• D. They are responsible for selling some of the securities to the public.

Correct Answer: B

Explanation:

B: A syndicate member can back out of the deal during the cooling off period. This usually happens if market conditions turn negative for the new issue. The other 3 answers are true.