Question 1

Which of the following statements is true of the various activities occurring during the registration process of securities in a sale?

Accepted Answer

A)  A registration becomes ineffective and invalid immediately at the expiry of the waiting period. 
B)  Contracts to buy and sell securities are finalized during the posteffective period. 
C)  It becomes legal to sell a security subject to the act during the waiting period. 
D)  During the prefiling period, offers to sell and buy securities are permitted as per the Securities Act of 1933. 
E)  Tombstone ads are made after the end of the posteffective period. 
A)  A registration becomes ineffective and invalid immediately at the expiry of the waiting period. 
B)  Contracts to buy and sell securities are finalized during the posteffective period. 
C)  It becomes legal to sell a security subject to the act during the waiting period. 
D)  During the prefiling period, offers to sell and buy securities are permitted as per the Securities Act of 1933. 
E)  Tombstone ads are made after the end of the posteffective period.

Question 2

What are the criminal penalties incorporated by the Congress for violating the Securities Exchange Act of 1934?

Accepted Answer

In response to the corporate scandals oc

Question 3

The Securities and Exchange Commission's (SEC's)adoption of rules and regulations relating to financial and other information furnished to the Commission comes under its ______ power.

Accepted Answer

A)  quasi-judicial 
B)  federal 
C)  quasi-executive 
D)  quasi-legislative 
E)  bargaining 
A)  quasi-judicial 
B)  federal 
C)  quasi-executive 
D)  quasi-legislative 
E)  bargaining

Question 4

According to the Securities Act of 1933,which of the following is illegal during the waiting period?

Accepted Answer

A)  Soliciting buyers for a company's securities 
B)  Receiving offers to buy a company's securities 
C)  Selling securities subject to the act 
D)  Soliciting through the use of a summary prospectus 
E)  Soliciting offers for later acceptance 
A)  Soliciting buyers for a company's securities 
B)  Receiving offers to buy a company's securities 
C)  Selling securities subject to the act 
D)  Soliciting through the use of a summary prospectus 
E)  Soliciting offers for later acceptance

Question 5

Which of the following statements is true of the Securities Enforcement Remedies Act?

Accepted Answer

A)  An individual found to have violated the securities laws may be prohibited by the court from serving as an officer or director of a business organization. 
B)  Civil fines of up to $700,000 per organization and $500,000 per individual may be imposed and collected by the courts. 
C)  It changes membership requirements of corporate audit committees. 
D)  It requires proof of criminal violation for individual and organizational fines to be imposed. 
E)  It refrains from imposing liability on a theory of fraud on any person who shall make or cause to be made any false or misleading statements. 
A)  An individual found to have violated the securities laws may be prohibited by the court from serving as an officer or director of a business organization. 
B)  Civil fines of up to $700,000 per organization and $500,000 per individual may be imposed and collected by the courts. 
C)  It changes membership requirements of corporate audit committees. 
D)  It requires proof of criminal violation for individual and organizational fines to be imposed. 
E)  It refrains from imposing liability on a theory of fraud on any person who shall make or cause to be made any false or misleading statements.

Question 6

Which of the following statements is true of the Securities Exchange Act of 1934?

Accepted Answer

A)  The Act makes it legal to sell a security on a national exchange. 
B)  The registration under the 1934 Act is the same as under the 1933 Act. 
C)  The registration process excludes filing of prescribed forms with the Securities Exchange Commission. 
D)  The Act deals with original offerings of securities instead of regulating transfers of securities after the initial sale. 
E)  The Act requires brokers and dealers to keep detailed records of their activities and filing of annual reports with the Securities Exchange Commission. 
A)  The Act makes it legal to sell a security on a national exchange. 
B)  The registration under the 1934 Act is the same as under the 1933 Act. 
C)  The registration process excludes filing of prescribed forms with the Securities Exchange Commission. 
D)  The Act deals with original offerings of securities instead of regulating transfers of securities after the initial sale. 
E)  The Act requires brokers and dealers to keep detailed records of their activities and filing of annual reports with the Securities Exchange Commission.

Question 7

The Sarbanes-Oxley Act provides protections for whistleblowers so that individuals are more willing to report the corruption that can lead to major scandals.

Accepted Answer

A) True 
 B)False

Question 8

Under the Sarbanes-Oxley Act of 2002,whistleblowers exclude contractors.

Accepted Answer

A) True 
 B)False

Question 9

The information contained in a prospectus is completely different from that contained in a registration statement.

Accepted Answer

A) True 
 B)False

Question 10

According to the Sarbanes-Oxley Act,auditors are required to preserve audit records for a period of

Accepted Answer

A)  three years. 
B)  five years. 
C)  two years. 
D)  nine years. 
E)  seven years. 
A)  three years. 
B)  five years. 
C)  two years. 
D)  nine years. 
E)  seven years.

Question 11

Who is a tippee?

Accepted Answer

A tippee is a person who learns of nonpu

Question 12

Which of the following statements is true of the statute of limitations?

Accepted Answer

A)  The defense mechanism is inapplicable in cases of civil liability. 
B)  The basic period for the statute of limitation is one year. 
C)  The statute of limitation begins even before the discovery of untrue statement or omission. 
D)  A suit may be brought in any event even after five years of sale. 
E)  The statute of limitation excludes reasonable diligence in discovering untrue statement or omission. 
A)  The defense mechanism is inapplicable in cases of civil liability. 
B)  The basic period for the statute of limitation is one year. 
C)  The statute of limitation begins even before the discovery of untrue statement or omission. 
D)  A suit may be brought in any event even after five years of sale. 
E)  The statute of limitation excludes reasonable diligence in discovering untrue statement or omission.

Question 13

The law prohibits the sale of worthless securities.

Accepted Answer

A) True 
 B)False

Question 14

The Securities Exchange Act makes it illegal to sell a security on a national exchange unless a registration is effective for the security.

Accepted Answer

A) True 
 B)False

Question 15

Benefit of the bargain refers to the measure of damages awarded to the buyer which is

Accepted Answer

A)  the amount that allows the injured party to revive the economic position held by him or her when the contract was made. 
B)  the out-of-pocket expense such as the legal fees incurred by the plaintiff. 
C)  the value of the security that was represented to be worth in the market. 
D)  the combination of the out-of-pocket expenses and what the security was represented to be worth in the market. 
E)  the difference between what he or she paid and what the security was represented to be worth. 
A)  the amount that allows the injured party to revive the economic position held by him or her when the contract was made. 
B)  the out-of-pocket expense such as the legal fees incurred by the plaintiff. 
C)  the value of the security that was represented to be worth in the market. 
D)  the combination of the out-of-pocket expenses and what the security was represented to be worth in the market. 
E)  the difference between what he or she paid and what the security was represented to be worth.

Question 16

Fraud occurs when any material fact is omitted from a prospectus causing a statement to be misleading.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true of a seller?

Accepted Answer

A)  It refers to anyone who contracts with a purchaser or who is a motivating influence that causes the purchase transaction to occur. 
B)  It refers to the individual or business organization offering a security for sale to the public. 
C)  It refers to anyone who prepares the registration statement and prospectus for securities involved in a sale. 
D)  It refers to a person who is in possession of an article and is responsible for returning the article safely to the owner once the contract is fulfilled. 
E)  It refers to anyone who controls or is controlled by the issuer, such as a major stockholder of a corporation. 
A)  It refers to anyone who contracts with a purchaser or who is a motivating influence that causes the purchase transaction to occur. 
B)  It refers to the individual or business organization offering a security for sale to the public. 
C)  It refers to anyone who prepares the registration statement and prospectus for securities involved in a sale. 
D)  It refers to a person who is in possession of an article and is responsible for returning the article safely to the owner once the contract is fulfilled. 
E)  It refers to anyone who controls or is controlled by the issuer, such as a major stockholder of a corporation.

Question 18

What is the difference between Section 18 of the 1934 Act and Sections 11 and 12 of the 1933 Act with regard to liability in case of fraud?

Accepted Answer

Two distinctions between Section 18 of t

Question 19

Explain the term "waiting period" with regard to the registration of securities.

Accepted Answer

After the registration statement is file

Question 20

The Securities and Exchange Commission (SEC)applies the misappropriation theory of insider trading to force executives who file or certify incorrect financial statements to return bonuses and additional compensation received.

Accepted Answer

A) True 
 B)False

Exam 17: Financial and Securities Regulations

Which of the following statements is true of the various activities occurring during the registration process of securities in a sale?

What are the criminal penalties incorporated by the Congress for violating the Securities Exchange Act of 1934?

The Securities and Exchange Commission's (SEC's)adoption of rules and regulations relating to financial and other information furnished to the Commission comes under its ______ power.

According to the Securities Act of 1933,which of the following is illegal during the waiting period?

Which of the following statements is true of the Securities Enforcement Remedies Act?

Which of the following statements is true of the Securities Exchange Act of 1934?

The Sarbanes-Oxley Act provides protections for whistleblowers so that individuals are more willing to report the corruption that can lead to major scandals.

Under the Sarbanes-Oxley Act of 2002,whistleblowers exclude contractors.

The information contained in a prospectus is completely different from that contained in a registration statement.

According to the Sarbanes-Oxley Act,auditors are required to preserve audit records for a period of

Who is a tippee?

Which of the following statements is true of the statute of limitations?

The law prohibits the sale of worthless securities.

The Securities Exchange Act makes it illegal to sell a security on a national exchange unless a registration is effective for the security.

Benefit of the bargain refers to the measure of damages awarded to the buyer which is

Fraud occurs when any material fact is omitted from a prospectus causing a statement to be misleading.

Which of the following statements is true of a seller?

What is the difference between Section 18 of the 1934 Act and Sections 11 and 12 of the 1933 Act with regard to liability in case of fraud?

Explain the term "waiting period" with regard to the registration of securities.

The Securities and Exchange Commission (SEC)applies the misappropriation theory of insider trading to force executives who file or certify incorrect financial statements to return bonuses and additional compensation received.

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