Question 1

The Sarbanes-Oxley Act:

Accepted Answer

A)  requires large companies with publicly traded stock to have the CEO personally certify the company's financial reports to the SEC 
B)  requires all securities litigation to be filed in federal court, not state court 
C)  provides whistle-blower protection from those reporting securities violations 
D)  requires large companies with publicly traded stock to have the CEO personally certify the company's financial reports to the SEC and provides whistle-blower protection fro those reporting securities violations 
E)  requires large companies with publicly traded stock to have the CEO personally certify the company's financial reports to the SEC and requires all securities litigation to be filed in federal court, not state court and provides whistle-blower protection fro those reporting securities violations 
A)  requires large companies with publicly traded stock to have the CEO personally certify the company's financial reports to the SEC 
B)  requires all securities litigation to be filed in federal court, not state court 
C)  provides whistle-blower protection from those reporting securities violations 
D)  requires large companies with publicly traded stock to have the CEO personally certify the company's financial reports to the SEC and provides whistle-blower protection fro those reporting securities violations 
E)  requires large companies with publicly traded stock to have the CEO personally certify the company's financial reports to the SEC and requires all securities litigation to be filed in federal court, not state court and provides whistle-blower protection fro those reporting securities violations

Question 2

Insider trading in most advanced European nations is treated more harshly than it has been in the U.S.

Accepted Answer

A) True 
 B)False

Question 3

When one company wants to take over another, one way it may be done is by proxy.

Accepted Answer

A) True 
 B)False

Question 4

Since it is not practical for many stock owners to attend corporate meetings at which shareholders vote to approve major decisions, shareholders are sent ____ to be voted on their behalf.

Accepted Answer

A)  proxies 
B)  substitutes 
C)  informants 
D)  secret ballots 
E)  open ballots 
A)  proxies 
B)  substitutes 
C)  informants 
D)  secret ballots 
E)  open ballots

Question 5

If SEC examiners realize that a proposed securities offering is particularly foolish, they may stop the sale of the securities because it fails the merit test.

Accepted Answer

A) True 
 B)False

Question 6

Shares of stock in a company usually include ownership rights.

Accepted Answer

A) True 
 B)False

Question 7

The 1933 Securities Act is supposed to prevent fraud and misrepresentation in the sale of new securities.

Accepted Answer

A) True 
 B)False

Question 8

The investment banker who markets a new security offering is called an underwriter.

Accepted Answer

A) True 
 B)False

Question 9

To be considered accredited investors, a couple must have an annual income of at least:

Accepted Answer

A)  $50,000 
B)  $100,000 
C)  $150,000 
D)  $200,000 
E)  $300,000 
A)  $50,000 
B)  $100,000 
C)  $150,000 
D)  $200,000 
E)  $300,000

Question 10

Congress has passed a law to help securities offerings on the Internet not get caught up in state securities regulations.

Accepted Answer

A) True 
 B)False

Question 11

Most securities are issued by firms that can use a quicker registration process. These are:

Accepted Answer

A)  well-known seasoned issuers that have issued at least $1 billion in securities previously 
B)  private placement specialists registered with the SEC 
C)  self-registration offering brokerages that work only with accredited investors 
D)  Regulation D offering specialist firms that are accredited by the SEC 
E)  none of the other choices; there is no such process 
A)  well-known seasoned issuers that have issued at least $1 billion in securities previously 
B)  private placement specialists registered with the SEC 
C)  self-registration offering brokerages that work only with accredited investors 
D)  Regulation D offering specialist firms that are accredited by the SEC 
E)  none of the other choices; there is no such process

Question 12

Which of the following is NOT a securities professional:

Accepted Answer

A)  a broker 
B)  a dealer 
C)  an adviser 
D)  all of the other specific choices are securities professionals 
E)  none of the other specific choices are correct 
A)  a broker 
B)  a dealer 
C)  an adviser 
D)  all of the other specific choices are securities professionals 
E)  none of the other specific choices are correct

Question 13

According to SEC rules, 8-K reports must be filed:

Accepted Answer

A)  annually 
B)  weekly 
C)  monthly 
D)  quarterly 
E)  whenever significant financial developments occur 
A)  annually 
B)  weekly 
C)  monthly 
D)  quarterly 
E)  whenever significant financial developments occur

Question 14

SEC examiners of a proposed securities offering can issue a "deficiency letter" if they believe the information in a prospectus is not complete. However, if the issuer responds in a timely manner, the SEC cannot delay the sale.

Accepted Answer

A) True 
 B)False

Question 15

A securities professional who are in the business of charging fees for recommendations on investments is a(n):

Accepted Answer

A)  broker 
B)  dealer 
C)  investment adviser 
D)  scalper 
E)  churner 
A)  broker 
B)  dealer 
C)  investment adviser 
D)  scalper 
E)  churner

Question 16

The most common Regulation D offerings for private placements are called:

Accepted Answer

A)  Accredited Investors Offering Registration 
B)  Small Corporate Offering Registration 
C)  Large Corporate Offering Registration 
D)  EDGAR Registrations 
E)  none of the other choices 
A)  Accredited Investors Offering Registration 
B)  Small Corporate Offering Registration 
C)  Large Corporate Offering Registration 
D)  EDGAR Registrations 
E)  none of the other choices

Question 17

The preliminary version of a prospectus, called a "red herring," may not be released to the public until approved by the SEC.

Accepted Answer

A) True 
 B)False

Question 18

Under Rule 144A some U.S. and foreign securities are exempt from registration requirements for the sale of stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 19

What is not an element in the Supreme Court's SEC v. Howey definition of securities:

Accepted Answer

A)  an investment of money 
B)  in a common enterprise 
C)  with an expectation of profits 
D)  enterprise is managed by others 
E)  all of the other choices are part of the definition 
A)  an investment of money 
B)  in a common enterprise 
C)  with an expectation of profits 
D)  enterprise is managed by others 
E)  all of the other choices are part of the definition

Question 20

The rationale behind prohibiting insider trading is that:

Accepted Answer

A)  it gives the public an unfair advantage 
B)  it puts people with inside information at a competitive disadvantage 
C)  it is a perk of the job for executives 
D)  it reduces the compensation packages of executives 
E)  none of the other choices 
A)  it gives the public an unfair advantage 
B)  it puts people with inside information at a competitive disadvantage 
C)  it is a perk of the job for executives 
D)  it reduces the compensation packages of executives 
E)  none of the other choices

Exam 18: Securities Regulation

The Sarbanes-Oxley Act:

Insider trading in most advanced European nations is treated more harshly than it has been in the U.S.

When one company wants to take over another, one way it may be done is by proxy.

Since it is not practical for many stock owners to attend corporate meetings at which shareholders vote to approve major decisions, shareholders are sent ____ to be voted on their behalf.

If SEC examiners realize that a proposed securities offering is particularly foolish, they may stop the sale of the securities because it fails the merit test.

Shares of stock in a company usually include ownership rights.

The 1933 Securities Act is supposed to prevent fraud and misrepresentation in the sale of new securities.

The investment banker who markets a new security offering is called an underwriter.

To be considered accredited investors, a couple must have an annual income of at least:

Congress has passed a law to help securities offerings on the Internet not get caught up in state securities regulations.

Most securities are issued by firms that can use a quicker registration process. These are:

Which of the following is NOT a securities professional:

According to SEC rules, 8-K reports must be filed:

SEC examiners of a proposed securities offering can issue a "deficiency letter" if they believe the information in a prospectus is not complete. However, if the issuer responds in a timely manner, the SEC cannot delay the sale.

A securities professional who are in the business of charging fees for recommendations on investments is a(n):

The most common Regulation D offerings for private placements are called:

The preliminary version of a prospectus, called a "red herring," may not be released to the public until approved by the SEC.

Under Rule 144A some U.S. and foreign securities are exempt from registration requirements for the sale of stocks and bonds.

What is not an element in the Supreme Court's SEC v. Howey definition of securities:

The rationale behind prohibiting insider trading is that:

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