Question 1

Corporate accountability can be increased by imposing strict disclosure requirements for securities transactions.

Accepted Answer

A) True 
 B)False

Question 2

Readmore Bookstore Corporation files a registration statement and delivers a prospectus to the appropriate parties.These items are intended to enable the evaluation of certain financial risks by

Accepted Answer

A)  market professionals to explain to all investors.
B)  government regulators to disclose to the general public.
C)  sophisticated investors only.
D)  unsophisticated investors.E) A) and C)
F) None of the above

Question 3

GR8 Stuf Company files a registration statement with the SEC before making an offering to the general public.The registration contains false,immaterial statements of which the investors are unaware.GR8 Stuf is charged with violating the Securities Act of 1933.GR8 Stuf's best defense is

Accepted Answer

A)  the investors were not aware of the misrepresentations.
B)  the issuer reasonably believed the misstatements were true.
C)  the offering was made available to the general public.
D)  the untrue statements were not material.E) None of the above
F) A) and C)

Question 4

It is always wrong to disclose material,nonpublic information about a company to a person who would not otherwise be privy to it.

Accepted Answer

A) True 
 B)False

Question 5

The Securities and Exchange Commission creates regulations governing the purchase and sale of securities.

Accepted Answer

A) True 
 B)False

Question 6

Ernie contracts to buy securities from Freda.Later,believing that Freda committed fraud in the deal,Ernie files a suit against her.If Freda is found liable,Ernie may obtain

Accepted Answer

A)  an apology only.
B)  damages to the extent of Freda's illegal profits only.
C)  damages to the extent of Freda's illegal profits or rescission of Ernie's contract to buy securities from Freda.
D)  rescission of Ernie's contract to buy securities from Freda only.E) B) and D)
F) B) and C)

Question 7

Selling securities under an exemption for which the securities do not qualify results in liability.

Accepted Answer

A) True 
 B)False

Question 8

Securities offerings in unlimited amounts can be exempt from the registration requirements in certain circumstances.

Accepted Answer

A) True 
 B)False

Question 9

As part of a stock offering for Equine Corporation,Flem,Equine's accountant,intention?ally misrepresents material facts in the pro?spectus.Gigi buys the stock unaware of the misrepresentation and suf?fers a loss.Flem may be subject to

Accepted Answer

A)  a fine and damages only.
B)  a fine and imprisonment only.
C)  a fine,imprisonment,and damages.
D)  damages only.E) C) and D)
F) B) and D)

Question 10

A prospectus is a contract in which a person (1)invests (2)in a common enterprise (3)reasonably expecting profits.

Accepted Answer

A) True 
 B)False

Question 11

Squeaky Clean Corporation wants to make an offering of securities to the pub?lic.This offering is not exempt from registration under the Se?curities Act of 1933.Before Squeaky sells its securities,it must provide in?vestors with

Accepted Answer

A)  a forward-looking financial forecast.
B)  an investment contract.
C)  a prospectus.
D)  samples of is products.E) A) and C)
F) All of the above

Question 12

Mountain View Corporation is a noninvestment company that wants to is?sue stock of $3 million in a twelve-month period.Mountain View,with less than $20 mil?lion in annual sales,qualifies as a small business issuer.Before Mountain View sells the stock,it must provide investors with

Accepted Answer

A)  an offering circular.
B)  a notice of the issue.
C)  a red herring prospectus.
D)  a tombstone ad.E) A) and D)
F) B) and C)

Question 13

The Securities and Exchange Commission rarely issues interpretive releases to explain how securities laws apply in the online environment.

Accepted Answer

A) True 
 B)False

Question 14

Excel Aviation 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 Excel's board of directors.
B)  the later re-registration of Excel's securities.
C)  the short-swing activities of Excel's insiders.
D)  the solicitation of proxies from Excel's shareholders.E) A) and C)
F) All of the above

Question 15

Fact Pattern 42-1B 
Sid,a director of Tech Software Company,learns that a Tech engineer has developed "Ur Call," a new,exciting video game.Sid buys Tech stock and tells his friend Velma,who also buys Tech stock.When the new game is released three weeks later,Sid and Velma sell their stock for a big profit.
-Refer to Fact Pattern 42-1B.Regarding Sid's profits on the purchase and sale of Tech stock,under Section 16(b) of the Securities Exchange Act of 1934 Tech may recapture

Accepted Answer

A)  all of Sid's profits.
B)  half of Sid's profits.
C)  10 percent of Sid's profits.
D)  none of Sid's profits.E) B) and D)
F) A) and D)

Question 16

Begin Anew Enterprise,Inc. ,completes its registration process and issues a free-writing prospectus.This tells pro?spective investors

Accepted Answer

A)  about investing freely.
B)  how to write their own prospectus.
C)  that they can "freely write their own ticket" to buy Begin's securities.
D)  that they may obtain the prospectus at the SEC's Web site.E) B) and C)
F) A) and B)

Question 17

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

Question 18

Corner Café Company offers its stock for sale only in a single state.The law in Corner's state is like the law in most states.Corner's offer is sub?ject to state securities statutes that include

Accepted Answer

A)  antifraud and disclosure provisions.
B)  antifraud provisions only.
C)  disclosure provisions only.
D)  neither antifraud nor disclosure provisions.E) A) and B)
F) B) and C)

Question 19

To raise capital to form Plasticity Corporation with Quinn,Rona sells bonds and stock in other companies,and plans to register an initial public of?fer?ing under the Securities Act of 1933.SEC Rule l0b-5 covers

Accepted Answer

A)  most forms of securities.
B)  only bonds.
C)  only securities registered under the Securities Act of 1933.
D)  only stock.E) A) and B)
F) C) and D)

Question 20

Typically,state laws have disclosure requirements and antifraud pro?visions patterned after Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5.

Accepted Answer

A) True 
 B)False

Exam 42: A: Securities Law Corporate Governance

To raise capital to form Plasticity Corporation with Quinn,Rona sells bonds and stock in other companies,and plans to register an initial public of?fer?ing under the Securities Act of 1933.SEC Rule l0b-5 covers

Correct Answer
verified

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

Correct Answer
verified

Corporate accountability can be increased by imposing strict disclosure requirements for securities transactions.

Correct Answer
verified

Squeaky Clean Corporation wants to make an offering of securities to the pub?lic.This offering is not exempt from registration under the Se?curities Act of 1933.Before Squeaky sells its securities,it must provide in?vestors with

Correct Answer
verified

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

Correct Answer
verified

A prospectus is a contract in which a person (1)invests (2)in a common enterprise (3)reasonably expecting profits.

Correct Answer
verified

Securities offerings in unlimited amounts can be exempt from the registration requirements in certain circumstances.

Correct Answer
verified

Begin Anew Enterprise,Inc. ,completes its registration process and issues a free-writing prospectus.This tells pro?spective investors

Correct Answer
verified

The Securities and Exchange Commission rarely issues interpretive releases to explain how securities laws apply in the online environment.

Correct Answer
verified

Readmore Bookstore Corporation files a registration statement and delivers a prospectus to the appropriate parties.These items are intended to enable the evaluation of certain financial risks by

Correct Answer
verified

It is always wrong to disclose material,nonpublic information about a company to a person who would not otherwise be privy to it.

Correct Answer
verified

Correct Answer
verified

GR8 Stuf Company files a registration statement with the SEC before making an offering to the general public.The registration contains false,immaterial statements of which the investors are unaware.GR8 Stuf is charged with violating the Securities Act of 1933.GR8 Stuf's best defense is

Correct Answer
verified

Selling securities under an exemption for which the securities do not qualify results in liability.

Correct Answer
verified

Ernie contracts to buy securities from Freda.Later,believing that Freda committed fraud in the deal,Ernie files a suit against her.If Freda is found liable,Ernie may obtain

Correct Answer
verified

The Securities and Exchange Commission creates regulations governing the purchase and sale of securities.

Correct Answer
verified

As part of a stock offering for Equine Corporation,Flem,Equine's accountant,intention?ally misrepresents material facts in the pro?spectus.Gigi buys the stock unaware of the misrepresentation and suf?fers a loss.Flem may be subject to

Correct Answer
verified

Typically,state laws have disclosure requirements and antifraud pro?visions patterned after Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5.

Correct Answer
verified

Mountain View Corporation is a noninvestment company that wants to is?sue stock of $3 million in a twelve-month period.Mountain View,with less than $20 mil?lion in annual sales,qualifies as a small business issuer.Before Mountain View sells the stock,it must provide investors with

Correct Answer
verified

Corner Café Company offers its stock for sale only in a single state.The law in Corner's state is like the law in most states.Corner's offer is sub?ject to state securities statutes that include

Correct Answer
verified

Exam 42: A: Securities Law Corporate Governance

To raise capital to form Plasticity Corporation with Quinn,Rona sells bonds and stock in other companies,and plans to register an initial public of?fer?ing under the Securities Act of 1933.SEC Rule l0b-5 covers

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Corporate accountability can be increased by imposing strict disclosure requirements for securities transactions.

Correct AnswerverifiedShow Answer

Squeaky Clean Corporation wants to make an offering of securities to the pub?lic.This offering is not exempt from registration under the Se?curities Act of 1933.Before Squeaky sells its securities,it must provide in?vestors with

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A prospectus is a contract in which a person (1)invests (2)in a common enterprise (3)reasonably expecting profits.

Correct AnswerverifiedShow Answer

Securities offerings in unlimited amounts can be exempt from the registration requirements in certain circumstances.

Correct AnswerverifiedShow Answer

Begin Anew Enterprise,Inc. ,completes its registration process and issues a free-writing prospectus.This tells pro?spective investors

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission rarely issues interpretive releases to explain how securities laws apply in the online environment.

Correct AnswerverifiedShow Answer

Readmore Bookstore Corporation files a registration statement and delivers a prospectus to the appropriate parties.These items are intended to enable the evaluation of certain financial risks by

Correct AnswerverifiedShow Answer

It is always wrong to disclose material,nonpublic information about a company to a person who would not otherwise be privy to it.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

GR8 Stuf Company files a registration statement with the SEC before making an offering to the general public.The registration contains false,immaterial statements of which the investors are unaware.GR8 Stuf is charged with violating the Securities Act of 1933.GR8 Stuf's best defense is

Correct AnswerverifiedShow Answer

Selling securities under an exemption for which the securities do not qualify results in liability.

Correct AnswerverifiedShow Answer

Ernie contracts to buy securities from Freda.Later,believing that Freda committed fraud in the deal,Ernie files a suit against her.If Freda is found liable,Ernie may obtain

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission creates regulations governing the purchase and sale of securities.

Correct AnswerverifiedShow Answer

As part of a stock offering for Equine Corporation,Flem,Equine's accountant,intention?ally misrepresents material facts in the pro?spectus.Gigi buys the stock unaware of the misrepresentation and suf?fers a loss.Flem may be subject to

Correct AnswerverifiedShow Answer

Typically,state laws have disclosure requirements and antifraud pro?visions patterned after Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5.

Correct AnswerverifiedShow Answer

Mountain View Corporation is a noninvestment company that wants to is?sue stock of $3 million in a twelve-month period.Mountain View,with less than $20 mil?lion in annual sales,qualifies as a small business issuer.Before Mountain View sells the stock,it must provide investors with

Correct AnswerverifiedShow Answer

Corner Café Company offers its stock for sale only in a single state.The law in Corner's state is like the law in most states.Corner's offer is sub?ject to state securities statutes that include

Correct AnswerverifiedShow Answer

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