Question 1

In 2016,the SEC abolished the requirement that a registration statement disclose compensation paid to senior executives and directors.

Accepted Answer

A) True 
 B)False

Question 2

A registration statement becomes public immediately on filing with the SEC,but a prospectus only becomes public upon signature of the chief financial officer.

Accepted Answer

A) True 
 B)False

Question 3

Registration with the SEC ensures a potential investor as to the financial soundness of the business represented by the stock.

Accepted Answer

A) True 
 B)False

Question 4

If Morris owns shares in General Custard Co. ,he may bring his proposal for a new subdivision,branching out into gelato,before the shareholders if he:

Accepted Answer

A)  owns at least 5% of the General Custard Co.stock. 
B)  owns at least 10% of the General Custard Co.stock. 
C)  limits it to 5,000 words. 
D)  has not made a proposal yet this year. 
A)  owns at least 5% of the General Custard Co.stock. 
B)  owns at least 10% of the General Custard Co.stock. 
C)  limits it to 5,000 words. 
D)  has not made a proposal yet this year.

Question 5

Which of the following are basic objectives of the 1933 Securities Act?

Accepted Answer

A)  To provide investors with material information concerning securities offered for sale to the public. 
B)  To prohibit misrepresentation,deceit,and other fraudulent acts and unfair practices in the sale of securities generally,whether or not they are required to be registered. 
C)  Both of these. 
D)  None of these. 
A)  To provide investors with material information concerning securities offered for sale to the public. 
B)  To prohibit misrepresentation,deceit,and other fraudulent acts and unfair practices in the sale of securities generally,whether or not they are required to be registered. 
C)  Both of these. 
D)  None of these.

Question 6

The rule that prohibits schemes and devices to defraud investors is Rule:

Accepted Answer

A)  504. 
B)  14a-3. 
C)  10b-5. 
D)  16(b). 
A)  504. 
B)  14a-3. 
C)  10b-5. 
D)  16(b).

Question 7

The profits realized for violation of Rule 16(b)are given directly to the shareholders as a penalty to the corporation.

Accepted Answer

A) True 
 B)False

Question 8

A registration statement requires all of the following EXCEPT:

Accepted Answer

A)  financial statements certified by an independent accountant. 
B)  description of the business. 
C)  description of the management. 
D)  projection of future growth potential. 
A)  financial statements certified by an independent accountant. 
B)  description of the business. 
C)  description of the management. 
D)  projection of future growth potential.

Question 9

All fifty states have enacted identical statutes regulating tender offers.

Accepted Answer

A) True 
 B)False

Question 10

Section 16(b)differs from Rule 10b-5 in that the latter:

Accepted Answer

A)  applies to transfers within 6 months of each other. 
B)  only applies to officers,directors and 10% shareholders. 
C)  allows injured investors to recover damages on their own behalf. 
D)  All of these. 
A)  applies to transfers within 6 months of each other. 
B)  only applies to officers,directors and 10% shareholders. 
C)  allows injured investors to recover damages on their own behalf. 
D)  All of these.

Question 11

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a piece of her profits if they will each invest $2,000.Is the investment a security?

Accepted Answer

A)  Yes,since Marge will do all the work. 
B)  Yes,because her neighbors will have a security interest in the jelly. 
C)  No,since the neighbors are putting no effort into it. 
D)  No,because Marge is not issuing stock certificates. 
A)  Yes,since Marge will do all the work. 
B)  Yes,because her neighbors will have a security interest in the jelly. 
C)  No,since the neighbors are putting no effort into it. 
D)  No,because Marge is not issuing stock certificates.

Question 12

Which of the following would NOT be exempt from registration under the 1933 Securities Act?

Accepted Answer

A)  An offering restricted to the residents of the state in which the issuing company is organized and doing business 
B)  An offering of state securities 
C)  An offering of limited partnership interests 
D)  A private offering to sophisticated investors who will not redistribute them 
A)  An offering restricted to the residents of the state in which the issuing company is organized and doing business 
B)  An offering of state securities 
C)  An offering of limited partnership interests 
D)  A private offering to sophisticated investors who will not redistribute them

Question 13

The 1933 Act imposes only civil,not criminal,sanctions for violation of its provisions.

Accepted Answer

A) True 
 B)False

Question 14

The 1934 Act applies only to stock traded on a national exchange for companies whose corporate assets exceed $10 million.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is TRUE regarding the Foreign Corrupt Practices Act of 1977?

Accepted Answer

A)  It applies only to corporations whose securities are registered under the Securities Exchange Act of 1934. 
B)  It applies only to corporations engaged in foreign commerce. 
C)  The Act makes it illegal to bribe foreign officials to obtain business. 
D)  All of these are correct. 
A)  It applies only to corporations whose securities are registered under the Securities Exchange Act of 1934. 
B)  It applies only to corporations engaged in foreign commerce. 
C)  The Act makes it illegal to bribe foreign officials to obtain business. 
D)  All of these are correct.

Question 16

The Reform Act provides a safe harbor eliminating civil liability if a forward-looking statement is:

Accepted Answer

A)  material. 
B)  made with the assumption that it was not false or misleading. 
C)  identified as a forward-looking statement and is accompanied by meaningful cautionary statements. 
D)  made in connection with an initial public offering or a tender offer. 
A)  material. 
B)  made with the assumption that it was not false or misleading. 
C)  identified as a forward-looking statement and is accompanied by meaningful cautionary statements. 
D)  made in connection with an initial public offering or a tender offer.

Question 17

The 1934 Securities Exchange Act requires registration of:

Accepted Answer

A)  equity securities of companies traded over the counter whose corporate assets exceed $10 million and whose equity securities include a class with 500 or more shareholders. 
B)  stock listed on local stock exchanges. 
C)  all stock sold within the U.S. 
D)  all domestic stock sold within the U.S. 
A)  equity securities of companies traded over the counter whose corporate assets exceed $10 million and whose equity securities include a class with 500 or more shareholders. 
B)  stock listed on local stock exchanges. 
C)  all stock sold within the U.S. 
D)  all domestic stock sold within the U.S.

Question 18

If a limited offering of $1.6 million worth of shares is made only to banks,they will not be required to receive any disclosure materials.

Accepted Answer

A) True 
 B)False

Question 19

Insiders may refrain from trading on inside information rather than disclose it to avoid liability under Rule 10b-5.

Accepted Answer

A) True 
 B)False

Question 20

"Restricted securities" are those that are sold pursuant to an exemption from registration.

Accepted Answer

A) True 
 B)False

Exam 43: Securities Regulation

In 2016,the SEC abolished the requirement that a registration statement disclose compensation paid to senior executives and directors.

A registration statement becomes public immediately on filing with the SEC,but a prospectus only becomes public upon signature of the chief financial officer.

Registration with the SEC ensures a potential investor as to the financial soundness of the business represented by the stock.

If Morris owns shares in General Custard Co. ,he may bring his proposal for a new subdivision,branching out into gelato,before the shareholders if he:

Which of the following are basic objectives of the 1933 Securities Act?

The rule that prohibits schemes and devices to defraud investors is Rule:

The profits realized for violation of Rule 16(b)are given directly to the shareholders as a penalty to the corporation.

A registration statement requires all of the following EXCEPT:

All fifty states have enacted identical statutes regulating tender offers.

Section 16(b)differs from Rule 10b-5 in that the latter:

Marge wishes to raise some money to begin mass producing her prize-winning jellies and jams.She offers her neighbors a piece of her profits if they will each invest $2,000.Is the investment a security?

Which of the following would NOT be exempt from registration under the 1933 Securities Act?

The 1933 Act imposes only civil,not criminal,sanctions for violation of its provisions.

The 1934 Act applies only to stock traded on a national exchange for companies whose corporate assets exceed $10 million.

Which of the following is TRUE regarding the Foreign Corrupt Practices Act of 1977?

The Reform Act provides a safe harbor eliminating civil liability if a forward-looking statement is:

The 1934 Securities Exchange Act requires registration of:

If a limited offering of $1.6 million worth of shares is made only to banks,they will not be required to receive any disclosure materials.

Insiders may refrain from trading on inside information rather than disclose it to avoid liability under Rule 10b-5.

"Restricted securities" are those that are sold pursuant to an exemption from registration.

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

A: Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance,breach,and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits,collections,and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature,formation,and Powers

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection Double

Employment Law

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property,property Insurance,bailments,and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

Legal Terminology: Understanding Criminal and Civil Law Systems

Contract Law Terminology

Exploring the Legal Concepts of Agency and Fiduciary Duty

Understanding Key Legal Concepts in Sales and Contracts

Understanding the Terminology of Banking and Finance: Key Concepts and Definitions

Exploring Legal Concepts and Processes in Business Partnerships

Understanding Corporate Law: A Guide to Ultra Vires Acts, Subscribers, Debt Securities, and More

Understanding Key Terms in Secured Transactions and Bankruptcy Law

Legal Topics and Terms