SIE (Securities Industry Essentials) Practice Exam

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What is the principal difference between a selling syndicate and a selling group?

Geographical coverage
Size of the entity
Industry focus
Commitment

The correct answer is: Commitment

A selling syndicate and a selling group are both forms of collaboration within the financial industry. A selling group is a group of underwriters that may sell shares in a company's initial public offering (IPO) that are allocated to them by the lead underwriter. On the other hand, a selling syndicate is a group of broker-dealers or other financial institutions who work together to underwrite and distribute a new securities offering. The key difference between the two is the level of commitment. A selling group is not required to commit to purchasing a specific amount of shares, while a selling syndicate is required to commit to a specific number of shares. Therefore, the principal difference between a selling syndicate and a selling group is the level of commitment required. The other options provided are incorrect as they do not accurately capture the main distinction between the two forms of collaboration.