Question 1

Under the Sarbanes-Oxley Act of 2002, chief financial officers must certify the accuracy of information in corporate financial statements.

Accepted Answer

A) True 
 B)False  True

Question 2

Fleet Delivery Corporation is a public company with a market capitalization of less than $75 million. Fleet is poised to issue securities in a transaction that, under the Securities Act of 1933, is "exempt." This enables Fleet to​

Accepted Answer

A)  ​reduce the compliance costs by not requiring an auditor report. 
B)  ​buy and sell the securities without liability for "recaptures." 
C)  ​make forward-looking financial forecasts without liability. 
D)  ​withhold inside information from accredited investors. 
A)  ​reduce the compliance costs by not requiring an auditor report. 
B)  ​buy and sell the securities without liability for "recaptures." 
C)  ​make forward-looking financial forecasts without liability. 
D)  ​withhold inside information from accredited investors. A

Question 3

Under the Sarbanes-Oxley Act of 2002, all members of a publicly traded corporation's audit committee must be outside directors.

Accepted Answer

A) True 
 B)False  True

Question 4

Bernie is the chief executive officer of Cooking Network, Inc., which is required to file certain financial reports with the Securities and Exchange Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Bernie 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 5

Household Products Corporation wants to make an offering of securities to the public. The offering is not exempt from registration under the Securities Act of 1933. Before the firm sells its securities, it must provide investors with​

Accepted Answer

A)  ​a forward-looking financial forecast. 
B)  ​an investment contract. 
C)  ​a prospectus. 
D)  ​samples of its products. 
A)  ​a forward-looking financial forecast. 
B)  ​an investment contract. 
C)  ​a prospectus. 
D)  ​samples of its products.

Question 6

The sale and transfer of securities are heavily regulated by federal and state statutes and by government agencies.

Accepted Answer

A) True 
 B)False

Question 7

Global Trade Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that Global Trade 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 stock 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 stock exchange.

Question 8

The Securities and Exchange Commission has implemented no new regulations since the Securities Exchange Act.

Accepted Answer

A) True 
 B)False

Question 9

State corporation statues set up the legal framework for corporate governance.

Accepted Answer

A) True 
 B)False

Question 10

Most private, midsize-business, noninvestment company offers of securities are exempt from the registration requirements.

Accepted Answer

A) True 
 B)False

Question 11

Fact Pattern 7-1
College Bound, Inc., markets test and study prep materials and courses. College Bound wants to make an initial public offering of securities. The firm believes that it qualifies for an exemption under Regulation A from the full registration requirement of the Securities Act of 1933.
-Refer to Fact Pattern 7-1. If College Bound is exempt from the federal registration requirement, the firm is​

Accepted Answer

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

Question 12

The definition of security in the Securities Act of 1933 includes interests that involve the right to buy a security on a national security exchange.

Accepted Answer

A) True 
 B)False

Question 13

The Sarbanes-Oxley Act of 2002 attempts to increase corporate accountability by imposing strict disclosure requirements and harsh penalties for securities laws.

Accepted Answer

A) True 
 B)False

Question 14

Most private, small-business, noninvestment company offers of securities are exempt from the registration requirements.

Accepted Answer

A) True 
 B)False

Question 15

To raise $120 million to expand operations, Primo Content Inc. makes a stock offering directly to sixty accredited investors and twenty sophisticated, but unaccredited investors. The firm plans to notify the SEC of sales. Under the Securities Act of 1933, this issue may qualify as an "exempt" transaction​

Accepted Answer

A)  ​as is. 
B)  ​if all of the investors are also given material information about the firm, including its most recent financial statements. 
C)  ​if the offering is also made to the general public. 
D)  ​under no circumstances. 
A)  ​as is. 
B)  ​if all of the investors are also given material information about the firm, including its most recent financial statements. 
C)  ​if the offering is also made to the general public. 
D)  ​under no circumstances.

Question 16

Fact Pattern 7-3
Dan, an accountant for Eureka! Inc. learns of undisclosed company plans to market a new laptop. Dan buys 1,000 shares of the firm's stock. He reveals the company plans to Fay, who tells Greg. Both Fay and Greg buy 100 shares. Greg knows that Fay got her information from Dan. When Eureka! publicly announces its new laptop, Dan, Fay, and Greg sell their stock for a profit.
-Refer to Fact Pattern 7-3. Under the Securities Exchange Act of 1934, Fay is most likely​

Accepted Answer

A)  ​liable for insider trading. 
B)  ​not liable because Fay did not prevent others from profiting. 
C)  ​not liable because Fay did not misappropriate any information. 
D)  ​not liable because Fay does not work for Eureka! 
A)  ​liable for insider trading. 
B)  ​not liable because Fay did not prevent others from profiting. 
C)  ​not liable because Fay did not misappropriate any information. 
D)  ​not liable because Fay does not work for Eureka!

Question 17

The key to liability under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is whether information omitted or misrepresented in connection with the purchase or sale of a security is material.

Accepted Answer

A) True 
 B)False

Question 18

Bonds & Stocks Corporation, and its officers, directors, and shareholders, buy and sell securities. SEC Rule 10b-5 applies to the purchase or sale of​

Accepted Answer

A)  ​a security by a financial corporation only. 
B)  ​a security involving a corporate insider only. 
C)  ​a security involving short-swing profits only. 
D)  ​any security. 
A)  ​a security by a financial corporation only. 
B)  ​a security involving a corporate insider only. 
C)  ​a security involving short-swing profits only. 
D)  ​any security.

Question 19

Ridley is an officer of Sun Watts, Inc. Ridley knows that a Sun Watts engineer recently developed a new, inexpensive method for collecting, storing, and converting solar power into fuel. Ridley takes advantage of this information to buy Sun Watts stock from Taylor and, after the discovery is announced, to sell the stock to Ulrich at a profit. Taylor claims that this is a violation of federal law. Is Taylor correct? If so, what federal law has Ridley violated, and what are its possible penalties?​

Accepted Answer

Yes, assuming that Taylor did not know a

Question 20

Anyone who wrongfully obtains inside information and trades on it for his or her personal gain can be liable under SEC Rule 10b-5.

Accepted Answer

A) True 
 B)False

Exam 7: Securities Law and Corporate Governance

Under the Sarbanes-Oxley Act of 2002, chief financial officers must certify the accuracy of information in corporate financial statements.

Fleet Delivery Corporation is a public company with a market capitalization of less than $75 million. Fleet is poised to issue securities in a transaction that, under the Securities Act of 1933, is "exempt." This enables Fleet to​

Under the Sarbanes-Oxley Act of 2002, all members of a publicly traded corporation's audit committee must be outside directors.

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

Household Products Corporation wants to make an offering of securities to the public. The offering is not exempt from registration under the Securities Act of 1933. Before the firm sells its securities, it must provide investors with​

The sale and transfer of securities are heavily regulated by federal and state statutes and by government agencies.

Global Trade Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that Global Trade must​

The Securities and Exchange Commission has implemented no new regulations since the Securities Exchange Act.

State corporation statues set up the legal framework for corporate governance.

Most private, midsize-business, noninvestment company offers of securities are exempt from the registration requirements.

The definition of security in the Securities Act of 1933 includes interests that involve the right to buy a security on a national security exchange.

The Sarbanes-Oxley Act of 2002 attempts to increase corporate accountability by imposing strict disclosure requirements and harsh penalties for securities laws.

Most private, small-business, noninvestment company offers of securities are exempt from the registration requirements.

The key to liability under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is whether information omitted or misrepresented in connection with the purchase or sale of a security is material.

Bonds & Stocks Corporation, and its officers, directors, and shareholders, buy and sell securities. SEC Rule 10b-5 applies to the purchase or sale of​

Anyone who wrongfully obtains inside information and trades on it for his or her personal gain can be liable under SEC Rule 10b-5.

Business Ethics

Small Businesses and Franchises

All Forms of Partnerships

Limited Liability Companies and Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, and Shareholders

Tort Law

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

The Formation of Sales and Lease Contracts

Performance and Breach of Sales and Lease Contracts

Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Professional Liability and Accountability

Administrative Agencies

Consumer Law

Environmental Protection

Antitrust Law

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Intellectual Property

Insurance

Wills and Trusts

Digital Update:should Employees Have a Right of Disconnecting

Digital Update: Revenge Porn and Invasion of Privacy

Digital Update: Taxing Web Purchases

Ethics Today:what Are an Attorneys Responsibilities for Protecting Data Stored in a Cloud

Digital Update:the Exploding World of Digital Property

Filters

Fleet Delivery Corporation is a public company with a market capitalization of less than $75 million. Fleet is poised to issue securities in a transaction that, under the Securities Act of 1933, is "exempt." This enables Fleet to

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

Household Products Corporation wants to make an offering of securities to the public. The offering is not exempt from registration under the Securities Act of 1933. Before the firm sells its securities, it must provide investors with

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

Bonds & Stocks Corporation, and its officers, directors, and shareholders, buy and sell securities. SEC Rule 10b-5 applies to the purchase or sale of