Question 1

Accredited investors often buy private placement securities through Regulation D offerings. The SEC must be informed of such offerings.

Accepted Answer

A) True 
 B)False

Question 2

The ____ is an extensive audited financial statement similar in content to the information provided in the registration process under the 1933 Act.

Accepted Answer

A)  I-9 annual report 
B)  8-K report 
C)  biannual 8-E report 
D)  prospectus 
E)  none of the other choices are correct 
A)  I-9 annual report 
B)  8-K report 
C)  biannual 8-E report 
D)  prospectus 
E)  none of the other choices are correct

Question 3

The SEC requires that investment companies pay dividends to investors that equal at least 50% of taxable ordinary income of the company.

Accepted Answer

A) True 
 B)False

Question 4

Insider trading laws in Europe:

Accepted Answer

A)  do not exist 
B)  exist, but their constitutionality is not certain 
C)  exist, but are generally not enforced as much as the law is in the U.S. 
D)  are generally tougher than U.S. insider trading laws 
E)  lead to about 100 criminal prosecutions per year for violations 
A)  do not exist 
B)  exist, but their constitutionality is not certain 
C)  exist, but are generally not enforced as much as the law is in the U.S. 
D)  are generally tougher than U.S. insider trading laws 
E)  lead to about 100 criminal prosecutions per year for violations

Question 5

A security is a written instrument that provides evidence of a debt or equity ownership.

Accepted Answer

A) True 
 B)False

Question 6

The term blue sky laws is attributed to a court opinion describing the purpose of state securities laws as working to prevent the "speculative schemes which would have no more basis than so many feet of blue sky."

Accepted Answer

A) True 
 B)False

Question 7

The federal agency that has the most to do with regulation of the securities markets is the:

Accepted Answer

A)  Securities and Exchange Commission 
B)  Federal Reserve Board 
C)  Federal Securities Commission 
D)  Interstate Securities Commission 
E)  Department of Justice 
A)  Securities and Exchange Commission 
B)  Federal Reserve Board 
C)  Federal Securities Commission 
D)  Interstate Securities Commission 
E)  Department of Justice

Question 8

When a company wants to take over another, it may issue:

Accepted Answer

A)  a shelf listing offer 
B)  a proxy 
C)  a merit regulation offer 
D)  a margin requirement 
E)  none of the other choices 
A)  a shelf listing offer 
B)  a proxy 
C)  a merit regulation offer 
D)  a margin requirement 
E)  none of the other choices

Question 9

If an investment is legally classified as a security, then the security issuer may choose to follow either state securities law or federal securities law.

Accepted Answer

A) True 
 B)False

Question 10

The first regulation of securities in the U.S. was the:

Accepted Answer

A)  Uniform Securities Act 
B)  Kansas blue sky law 
C)  Securities Exchange Act 
D)  Interstate Commerce Act 
E)  none of the other choices 
A)  Uniform Securities Act 
B)  Kansas blue sky law 
C)  Securities Exchange Act 
D)  Interstate Commerce Act 
E)  none of the other choices

Question 11

Most securities are issued by well-known seasoned issuers who have the right to:

Accepted Answer

A)  file registration statements the day they announce a new offering 
B)  use a free-writing prospectus that is continuously updated on a website 
C)  use shelf registration and sell a security over several years 
D)  all of the other specific choices 
E)  none of the other choices; there is no such process 
A)  file registration statements the day they announce a new offering 
B)  use a free-writing prospectus that is continuously updated on a website 
C)  use shelf registration and sell a security over several years 
D)  all of the other specific choices 
E)  none of the other choices; there is no such process

Question 12

Sarbanes-Oxley requires top executives to personally certify the correctness of financial reports made to the SEC.

Accepted Answer

A) True 
 B)False

Question 13

A new or an existing company may be financed by:

Accepted Answer

A)  debt only by law 
B)  U.S. Treasury bonds 
C)  equity only by law 
D)  debt and equity 
E)  debt and equity and U.S. Treasury bonds 
A)  debt only by law 
B)  U.S. Treasury bonds 
C)  equity only by law 
D)  debt and equity 
E)  debt and equity and U.S. Treasury bonds

Question 14

When one company wants to take over another, one device used is the tender offer.

Accepted Answer

A) True 
 B)False

Question 15

The Securities and Exchange Commission is responsible for enforcement and administration of federal securities law.

Accepted Answer

A) True 
 B)False

Question 16

Under the Securities Litigation Reform Act of 1995, companies face reduced liability for inaccurate statements predicting future corporate performance.

Accepted Answer

A) True 
 B)False

Question 17

A share of stock is, in part, a claim on a share of most recent year's profits of a company.

Accepted Answer

A) True 
 B)False

Question 18

The registration requirement of the Securities Act of 1933 applies to:

Accepted Answer

A)  charitable or religious organizations' securities 
B)  government bonds 
C)  insurance policies 
D)  all of the other specific choices 
E)  none of the other choices 
A)  charitable or religious organizations' securities 
B)  government bonds 
C)  insurance policies 
D)  all of the other specific choices 
E)  none of the other choices

Question 19

A chief executive of a company is exempt from liability in a case of securities fraud.

Accepted Answer

A) True 
 B)False

Question 20

The term "security" is defined to include a wide range of investment devices.

Accepted Answer

A) True 
 B)False

Exam 18: Securities Regulation

Accredited investors often buy private placement securities through Regulation D offerings. The SEC must be informed of such offerings.

The ____ is an extensive audited financial statement similar in content to the information provided in the registration process under the 1933 Act.

The SEC requires that investment companies pay dividends to investors that equal at least 50% of taxable ordinary income of the company.

Insider trading laws in Europe:

A security is a written instrument that provides evidence of a debt or equity ownership.

The term blue sky laws is attributed to a court opinion describing the purpose of state securities laws as working to prevent the "speculative schemes which would have no more basis than so many feet of blue sky."

The federal agency that has the most to do with regulation of the securities markets is the:

When a company wants to take over another, it may issue:

If an investment is legally classified as a security, then the security issuer may choose to follow either state securities law or federal securities law.

The first regulation of securities in the U.S. was the:

Most securities are issued by well-known seasoned issuers who have the right to:

Sarbanes-Oxley requires top executives to personally certify the correctness of financial reports made to the SEC.

A new or an existing company may be financed by:

When one company wants to take over another, one device used is the tender offer.

The Securities and Exchange Commission is responsible for enforcement and administration of federal securities law.

Under the Securities Litigation Reform Act of 1995, companies face reduced liability for inaccurate statements predicting future corporate performance.

A share of stock is, in part, a claim on a share of most recent year's profits of a company.

The registration requirement of the Securities Act of 1933 applies to:

A chief executive of a company is exempt from liability in a case of securities fraud.

The term "security" is defined to include a wide range of investment devices.

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