Question 1

The Securities Exchange Act of 1934 provides for continuous periodic disclosures by certain publicly held companies.

Accepted Answer

A) True 
 B)False

Question 2

United Delivery Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, United Delivery is required to

Accepted Answer

A)  buy or sell its securities only on a national security exchange. 
B)  register its securities transactions unless they qualify for an exemption. 
C)  invest its own managerial or entrepreneurial efforts. 
D)  issue instruments representing corporate ownership or debt. 
A)  buy or sell its securities only on a national security exchange. 
B)  register its securities transactions unless they qualify for an exemption. 
C)  invest its own managerial or entrepreneurial efforts. 
D)  issue instruments representing corporate ownership or debt.

Question 3

Bev is the chief executive officer of Chef Cafés Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Bev must

Accepted Answer

A)  certify that the reports are complete and accurate. 
B)  designate a corporate official to assume liability for inaccuracies. 
C)  do nothing. 
D)  read the reports and be prepared to answer questions about them. 
A)  certify that the reports are complete and accurate. 
B)  designate a corporate official to assume liability for inaccuracies. 
C)  do nothing. 
D)  read the reports and be prepared to answer questions about them.

Question 4

Grain Mills Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 14(a) of the act regulates

Accepted Answer

A)  the declaration of dividends by the firm's board of directors. 
B)  the later re-registration of the firm's securities. 
C)  the short-swing activities of the firm's insiders. 
D)  the solicitation of proxies from the firm's shareholders. 
A)  the declaration of dividends by the firm's board of directors. 
B)  the later re-registration of the firm's securities. 
C)  the short-swing activities of the firm's insiders. 
D)  the solicitation of proxies from the firm's shareholders.

Question 5

Components Assembly Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that the company must

Accepted Answer

A)  file a registration statement with the SEC. 
B)  issue the securities through an online registration site. 
C)  refrain from issuing the securities to unregistered investors. 
D)  register the securities with a national securities exchange. 
A)  file a registration statement with the SEC. 
B)  issue the securities through an online registration site. 
C)  refrain from issuing the securities to unregistered investors. 
D)  register the securities with a national securities exchange.

Question 6

While the Securities and Exchange Commission reviews a registration statement for completeness, the securities can be offered for sale but not sold.

Accepted Answer

A) True 
 B)False

Question 7

A well-known seasoned investor has less flexibility in filing registration statements and using free-writing prospectuses than other issuers.

Accepted Answer

A) True 
 B)False

Question 8

Ross, a sales executive with Steel Mill Inc., learns of undisclosed company plans to produce a new type of steel. Ross tells Tim, who tells Uri, who buys 100 shares of Steel stock. Uri knows that Tim got the information from Ross. When the firm publicly announces its new product, Uri sells the stock for a profit. Under the Securities Exchange Act of 1934, Uri is most likely

Accepted Answer

A)  liable for insider trading. 
B)  not liable because Uri is only a tippee, not a tipper. 
C)  not liable because Uri is too far removed from the initial disclosure. 
D)  not liable because Uri traded on the basis of a material fact. 
A)  liable for insider trading. 
B)  not liable because Uri is only a tippee, not a tipper. 
C)  not liable because Uri is too far removed from the initial disclosure. 
D)  not liable because Uri traded on the basis of a material fact.

Question 9

Furnaces & Filters Inc. is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that the firm's financial results are accurate and timely, its senior officers must set up and maintain

Accepted Answer

A)  internal "disclosure controls and procedures." 
B)  external "release and reveal timetables." 
C)  personal "peruse and review liability policies." 
D)  public "information and discussion forums." 
A)  internal "disclosure controls and procedures." 
B)  external "release and reveal timetables." 
C)  personal "peruse and review liability policies." 
D)  public "information and discussion forums."

Question 10

The goal of securities regulation is to

Accepted Answer

A)  contribute to the operations of national security exchanges. 
B)  prohibit deceptive and manipulative practices in the securities markets. 
C)  prescribe ways and means for investors to fairly break the rules. 
D)  none of the choices. 
A)  contribute to the operations of national security exchanges. 
B)  prohibit deceptive and manipulative practices in the securities markets. 
C)  prescribe ways and means for investors to fairly break the rules. 
D)  none of the choices.

Question 11

Dairy Stores Inc. owns and operates convenience stores. The firm wants to make an initial public offering of securities. If Dairy qualifies for an exemption from the federal registration requirement, the firm is

Accepted Answer

A)  exempt from any state registration requirement. 
B)  not subject to any state securities laws. 
C)  not necessarily exempt from a state registration requirement. 
D)  subject to all state registration requirements. 
A)  exempt from any state registration requirement. 
B)  not subject to any state securities laws. 
C)  not necessarily exempt from a state registration requirement. 
D)  subject to all state registration requirements.

Question 12

Luan, a programmer for Monetized Nation Inc., a business modeling service, learns of undisclosed company plans to distribute a new app. Luan reveals the company plans to a friend, Ono, who buys 5,000 shares of the firm's stock. Under the Securities Exchange Act of 1934, Ono is most likely

Accepted Answer

A)  liable for insider trading. 
B)  not liable because Ono did not prevent others from profiting. 
C)  not liable because Ono did not solicit information from Luan. 
D)  not liable because Ono does not work for the firm. 
A)  liable for insider trading. 
B)  not liable because Ono did not prevent others from profiting. 
C)  not liable because Ono did not solicit information from Luan. 
D)  not liable because Ono does not work for the firm.

Exam 36: Investor Protection, Insider Trading, and Corporate Governance

The Securities Exchange Act of 1934 provides for continuous periodic disclosures by certain publicly held companies.

United Delivery Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, United Delivery is required to

Bev is the chief executive officer of Chef Cafés Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Bev must

Grain Mills Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 14(a) of the act regulates

Components Assembly Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that the company must

While the Securities and Exchange Commission reviews a registration statement for completeness, the securities can be offered for sale but not sold.

A well-known seasoned investor has less flexibility in filing registration statements and using free-writing prospectuses than other issuers.

Furnaces & Filters Inc. is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that the firm's financial results are accurate and timely, its senior officers must set up and maintain

The goal of securities regulation is to

Dairy Stores Inc. owns and operates convenience stores. The firm wants to make an initial public offering of securities. If Dairy qualifies for an exemption from the federal registration requirement, the firm is

Luan, a programmer for Monetized Nation Inc., a business modeling service, learns of undisclosed company plans to distribute a new app. Luan reveals the company plans to a friend, Ono, who buys 5,000 shares of the firm's stock. Under the Securities Exchange Act of 1934, Ono is most likely

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