Question 1

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 2

To raise $120 million to expand operations, Primo 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. 
C) if the offering is also made to the general public. 
D) under no circumstances.

Question 3

Components Assembly Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that the company 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 securities exchange.

Question 4

While the Securities and Exchange Commission reviews a registration statement for completeness, most issuers can distribute a free-writing prospectus.

Accepted Answer

A) True 
 B)False

Question 5

Misrepresenting facts in a registration statement or prospectus is known as puffery and does not violate the Securities Act of 1933.

Accepted Answer

A) True 
 B)False

Question 6

Grain Mills Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 14(a)of the act regulates

Accepted Answer

A) the declaration of dividends by the firm's board of directors. 
B) the later re-registration of the firm's securities. 
C) the short-swing activities of the firm's insiders. 
D) the solicitation of proxies from the firm's shareholders.

Question 7

Issuers of securities offerings must comply with either federal or state securities laws, but not both concurrently.

Accepted Answer

A) True 
 B)False

Question 8

Exemptions from federal securities laws are also exemptions from state securities laws.

Accepted Answer

A) True 
 B)False

Question 9

Mars Mission Inc. is a regulated publicly held corporation. Under the Securities Act of 1934, Mars is required to

Accepted Answer

A) contribute to the operations of national stock exchanges. 
B) disclose information about its organization and financial situation. 
C) engage in market surveillance to deter undesirable practices. 
D) all of the choices.

Question 10

United Delivery Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, United Delivery is required to

Accepted Answer

A) buy or sell its securities only on a national security exchange. 
B) register its securities transactions unless they qualify for an exemption. 
C) invest its own managerial or entrepreneurial efforts. 
D) issue instruments representing corporate ownership or debt.

Question 11

Orbital Flights Inc. is required to register its securities under Section 12 of the Securities Exchange Act of 1934. This means that, with respect to Orbital, Section 16(b)of the act covers

Accepted Answer

A) the declaration of dividends by Orbital's board of directors. 
B) the later re-registration of Orbital's securities. 
C) the short-swing activities of Orbital's insiders. 
D) the solicitation of proxies from Orbital's shareholders.

Question 12

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

Exam 39: Investor Protection Insider Trading and Corporate Governance

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.

To raise $120 million to expand operations, Primo 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

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

While the Securities and Exchange Commission reviews a registration statement for completeness, most issuers can distribute a free-writing prospectus.

Misrepresenting facts in a registration statement or prospectus is known as puffery and does not violate the Securities Act of 1933.

Grain Mills Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 14(a) of the act regulates

Issuers of securities offerings must comply with either federal or state securities laws, but not both concurrently.

Exemptions from federal securities laws are also exemptions from state securities laws.

Mars Mission Inc. is a regulated publicly held corporation. Under the Securities Act of 1934, Mars is required to

United Delivery Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, United Delivery is required to

Orbital Flights Inc. is required to register its securities under Section 12 of the Securities Exchange Act of 1934. This means that, with respect to Orbital, Section 16(b) of the act covers

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 .