Question 1

The 1933 Act prohibits fraud only in transactions involving registered securities.

Accepted Answer

A) True 
 B)False

Question 2

When the underwriter buys stock from the issuer and sells it to the public it is referred to as a

Accepted Answer

A) ​best efforts underwriting. 
B) ​firm commitment underwriting. 
C) ​secondary underwriting. 
D) ​public underwriting. 
A) ​best efforts underwriting. 
B) ​firm commitment underwriting. 
C) ​secondary underwriting. 
D) ​public underwriting.

Question 3

MegaCorp wishes to sell $25 million of securities.The only investors will be 20 unaccredited investors.Which of the following applies to this offering?

Accepted Answer

A) Rule 504,option 1 of Regulation D of the 1933 Act 
B) Rule 505 of Regulation D of the 1933 Act 
C) Rule 506 of Regulation D of the 1933 Act 
D) Rule 504,option 2 of Regulation D of the 1933 Act 
A) Rule 504,option 1 of Regulation D of the 1933 Act 
B) Rule 505 of Regulation D of the 1933 Act 
C) Rule 506 of Regulation D of the 1933 Act 
D) Rule 504,option 2 of Regulation D of the 1933 Act

Question 4

When a stock underwriter acts as the company's agent in selling stock,it is called a

Accepted Answer

A) company underwriting. 
B) express underwriting. 
C) firm commitment underwriting. 
D) best efforts underwriting. 
A) company underwriting. 
B) express underwriting. 
C) firm commitment underwriting. 
D) best efforts underwriting.

Question 5

The 1933 Act exempts all but which of the following from its registration requirements?

Accepted Answer

A) short-term notes 
B) treasury stock 
C) government securities 
D) annuity contracts 
A) short-term notes 
B) treasury stock 
C) government securities 
D) annuity contracts

Question 6

The Securities Act of 1933 established the Securities and Exchange Commission.

Accepted Answer

A) True 
 B)False

Question 7

After the SEC completes its review of a preliminary registration statement,it sends the issuer a comment letter setting forth changes that must be made.

Accepted Answer

A) True 
 B)False

Question 8

Regulation Crowdfunding permits privately held companies to sell up to $1 million in securities in any 12-month period provided they meet a number of criteria.

Accepted Answer

A) True 
 B)False

Question 9

A control security is stock which gives the owner a controlling interest in the company.

Accepted Answer

A) True 
 B)False

Question 10

Under the 1934 Act,an issuer must register with the SEC if

Accepted Answer

A) it has not completed a public offering under the 1933 Act. 
B) its securities are not going to be traded on a national exchange. 
C) it will not be providing investors with a prospectus. 
D) it has at least 2,000 shareholders and total assets that exceed $10 million. 
A) it has not completed a public offering under the 1933 Act. 
B) its securities are not going to be traded on a national exchange. 
C) it will not be providing investors with a prospectus. 
D) it has at least 2,000 shareholders and total assets that exceed $10 million.

Question 11

Premier Enterprises sold Watson unregistered stock which was not exempt.The 1933 Act imposes liability on Premier,and Watson can demand rescission if he still owns the stock.

Accepted Answer

A) True 
 B)False

Question 12

In determining liability for errors in a registration statement,the plaintiff must prove that there was a misstatement or omission that was important enough to affect the plaintiff's investing decision.In other words,the misstatement or omission needs to be

Accepted Answer

A) material. 
B) unrefutable. 
C) accredited. 
D) firm. 
A) material. 
B) unrefutable. 
C) accredited. 
D) firm.

Question 13

A criminal case under the Securities Act of 1933 is prosecuted by

Accepted Answer

A) the SEC. 
B) the Justice Department. 
C) the Department of the Treasury. 
D) the FTC. 
A) the SEC. 
B) the Justice Department. 
C) the Department of the Treasury. 
D) the FTC.

Question 14

Which of the following is a characteristic of a restricted security?​

Accepted Answer

A) ​It is purchased in a private offering. 
B) It cannot be sold at any time. 
C) ​It is subject to reporting requirements. 
D) ​After six months,it is classified as a control security. 
A) ​It is purchased in a private offering. 
B) It cannot be sold at any time. 
C) ​It is subject to reporting requirements. 
D) ​After six months,it is classified as a control security.

Question 15

Felicity brought a lawsuit under Section 11 of the 1933 Act against Mojo Corp.What will Felicity have to prove in order to prevail?

Accepted Answer

A) only that she relied on the registration statement 
B) that Mojo was negligent in preparing the registration statement 
C) that there was a material misstatement or omission in the registration statement and she lost money 
D) that Mojo intentionally tried to deceive investors 
A) only that she relied on the registration statement 
B) that Mojo was negligent in preparing the registration statement 
C) that there was a material misstatement or omission in the registration statement and she lost money 
D) that Mojo intentionally tried to deceive investors

Question 16

Under what type of securities offering must the issuer determine if the investor is an accredited,sophisticated investor and if the stock is restricted?

Accepted Answer

A) Regulation A offering 
B) Regulation D offering 
C) public offering 
D) interstate offering 
A) Regulation A offering 
B) Regulation D offering 
C) public offering 
D) interstate offering

Question 17

Countywide Metals is a small company that incorporates in the state in which it is doing business and plans to offer and sell $100,000 worth of stock only to residents of the county in which it is doing business.Discuss the requirements Countywide must meet for registering its securities.

Accepted Answer

The Securities Act of 1933 requires that

Question 18

The Fallwater Partnership wants to incorporate and is considering using a DPO.Explain what a DPO is and discuss the advantages and disadvantages of this course of action.

Accepted Answer

A DPO is a direct public offering of sto

Question 19

The "tipper" of inside information can be convicted of a crime,but the "tippee" cannot.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following represents a valid Regulation A Tier 1 offering?

Accepted Answer

A) selling $3 million of securities in any 12-month period with a $250,000 individual investor limit 
B) selling $10 million in securities in any 12-month period;investors can't buy more than 10% of their annual income or net worth 
C) selling $20 million of securities in any 12-month period with no individual investor limit 
D) selling $20 million in securities in any 12-month period;investors can't buy more than 5% of their annual income or net worth 
A) selling $3 million of securities in any 12-month period with a $250,000 individual investor limit 
B) selling $10 million in securities in any 12-month period;investors can't buy more than 10% of their annual income or net worth 
C) selling $20 million of securities in any 12-month period with no individual investor limit 
D) selling $20 million in securities in any 12-month period;investors can't buy more than 5% of their annual income or net worth

Exam 37: Securities Regulation

The 1933 Act prohibits fraud only in transactions involving registered securities.

When the underwriter buys stock from the issuer and sells it to the public it is referred to as a

MegaCorp wishes to sell $25 million of securities.The only investors will be 20 unaccredited investors.Which of the following applies to this offering?

When a stock underwriter acts as the company's agent in selling stock,it is called a

The 1933 Act exempts all but which of the following from its registration requirements?

The Securities Act of 1933 established the Securities and Exchange Commission.

After the SEC completes its review of a preliminary registration statement,it sends the issuer a comment letter setting forth changes that must be made.

Regulation Crowdfunding permits privately held companies to sell up to $1 million in securities in any 12-month period provided they meet a number of criteria.

A control security is stock which gives the owner a controlling interest in the company.

Under the 1934 Act,an issuer must register with the SEC if

Premier Enterprises sold Watson unregistered stock which was not exempt.The 1933 Act imposes liability on Premier,and Watson can demand rescission if he still owns the stock.

In determining liability for errors in a registration statement,the plaintiff must prove that there was a misstatement or omission that was important enough to affect the plaintiff's investing decision.In other words,the misstatement or omission needs to be

A criminal case under the Securities Act of 1933 is prosecuted by

Which of the following is a characteristic of a restricted security?​

Felicity brought a lawsuit under Section 11 of the 1933 Act against Mojo Corp.What will Felicity have to prove in order to prevail?

Under what type of securities offering must the issuer determine if the investor is an accredited,sophisticated investor and if the stock is restricted?

Countywide Metals is a small company that incorporates in the state in which it is doing business and plans to offer and sell $100,000 worth of stock only to residents of the county in which it is doing business.Discuss the requirements Countywide must meet for registering its securities.

The Fallwater Partnership wants to incorporate and is considering using a DPO.Explain what a DPO is and discuss the advantages and disadvantages of this course of action.

The "tipper" of inside information can be convicted of a crime,but the "tippee" cannot.

Which of the following represents a valid Regulation A Tier 1 offering?

Introduction to Law

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Filters

Which of the following is a characteristic of a restricted security?