Question 1

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

Accepted Answer

A)  Rule 504 of the 1933 Act. 
B)  Rule 505 of the 1933 Act. 
C)  Rule 506 of the 1933 Act. 
D)  None of the above apply to this $25 million offering. 
A)  Rule 504 of the 1933 Act. 
B)  Rule 505 of the 1933 Act. 
C)  Rule 506 of the 1933 Act. 
D)  None of the above apply to this $25 million offering. C

Question 2

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

Accepted Answer

A)  Short-term notes. 
B)  Long-term notes. 
C)  Government securities. 
D)  Annuity contracts. 
A)  Short-term notes. 
B)  Long-term notes. 
C)  Government securities. 
D)  Annuity contracts. B

Question 3

The 1934 Act requires companies with a class of stock that is publicly traded to make regular filings with the SEC.

Accepted Answer

A) True 
 B)False  True

Question 4

Premier Enterprises sold Watson unregistered stock which was not exempt.The 1933 Act imposes liability on Premier,and Watson's sole remedy is damages.

Accepted Answer

A) True 
 B)False

Question 5

Ted is the vice-president in charge of marketing for Barnard Basketry.In any three-month period,he may sell:

Accepted Answer

A)  any amount of stock he owns in Barnard Basketry. 
B)  no more than 10 percent of the stock he owns in Barnard Basketry. 
C)  only an amount of stock equal to the average weekly trading volume for the prior four weeks or one percent of the number of shares outstanding, whichever is greater, under Rule 144. 
D)  any amount of stock he owns in Barnard Basketry as long as it has been more than six months since a private offering of the stock was made. 
A)  any amount of stock he owns in Barnard Basketry. 
B)  no more than 10 percent of the stock he owns in Barnard Basketry. 
C)  only an amount of stock equal to the average weekly trading volume for the prior four weeks or one percent of the number of shares outstanding, whichever is greater, under Rule 144. 
D)  any amount of stock he owns in Barnard Basketry as long as it has been more than six months since a private offering of the stock was made.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

An individual engaged in illegal insider trading could be:

Accepted Answer

A)  fined. 
B)  given a prison sentence. 
C)  required to pay the SEC three times the profit made. 
D)  All the above are correct. 
A)  fined. 
B)  given a prison sentence. 
C)  required to pay the SEC three times the profit made. 
D)  All the above are correct.

Question 8

Securities issued by banks are subject to SEC registration.

Accepted Answer

A) True 
 B)False

Question 9

The Foreign Corrupt Practices Act makes it a crime:

Accepted Answer

A)  for U. S. companies to sell unregistered stock in other countries. 
B)  for non-U. S. companies to sell unregistered securities in the U. S. 
C)  to "bribe" foreign governments or officials. 
D)  to conspire to defraud stock purchasers in other countries. 
A)  for U. S. companies to sell unregistered stock in other countries. 
B)  for non-U. S. companies to sell unregistered securities in the U. S. 
C)  to "bribe" foreign governments or officials. 
D)  to conspire to defraud stock purchasers in other countries.

Question 10

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 11

Which of the following requires companies to file annual reports containing audited financial statements?

Accepted Answer

A)  The 1933 Act. 
B)  The 1934 Act. 
C)  Regulation A. 
D)  Regulation B. 
A)  The 1933 Act. 
B)  The 1934 Act. 
C)  Regulation A. 
D)  Regulation B.

Question 12

The term "securities" could not include things like animal breeding arrangements.

Accepted Answer

A) True 
 B)False

Question 13

The Foreign Corrupt Practices Act:

Accepted Answer

A)  applies only to corporations registered under the federal Securities Exchange Act. 
B)  makes it illegal to bribe U. S. and foreign officials. 
C)  applies to U. S. corporations, whether reporting under the 1934 Act or not. 
D)  applies only to foreign corporations bribing U. S. officials. 
A)  applies only to corporations registered under the federal Securities Exchange Act. 
B)  makes it illegal to bribe U. S. and foreign officials. 
C)  applies to U. S. corporations, whether reporting under the 1934 Act or not. 
D)  applies only to foreign corporations bribing U. S. officials.

Question 14

What is the purpose of a registration statement and what information must be contained in it?

Accepted Answer

A registration statement has two purpose

Question 15

Valdon brought a lawsuit under Section 11 of the 1933 Act against Kenndey Corp.He will have to prove that:

Accepted Answer

A)  he relied on the registration statement. 
B)  Kenndey was negligent in preparing the registration statement. 
C)  there was a material misstatement or omission in the registration statement and he lost money. 
D)  All of the above. 
A)  he relied on the registration statement. 
B)  Kenndey was negligent in preparing the registration statement. 
C)  there was a material misstatement or omission in the registration statement and he lost money. 
D)  All of the above.

Question 16

Under Rule 504,a restricted security:

Accepted Answer

A)  can be sold at any time. 
B)  cannot be sold within nine months of its offering. 
C)  cannot be resold, either publicly or privately, for one year. 
D)  cannot be sold until the SEC issues a release letter allowing it to be sold. 
A)  can be sold at any time. 
B)  cannot be sold within nine months of its offering. 
C)  cannot be resold, either publicly or privately, for one year. 
D)  cannot be sold until the SEC issues a release letter allowing it to be sold.

Question 17

Any securities offerings not covered by the NSMIA must comply with state securities laws.

Accepted Answer

A) True 
 B)False

Question 18

The 1933 Act prohibits fraud in any securities transaction,not just transactions involving public offerings.

Accepted Answer

A) True 
 B)False

Question 19

Under what type of securities offering must the issuer determine if the investor is an accredited,sophisticated,or unaccredited investor?

Accepted Answer

A)  Regulation A offering. 
B)  Regulation D offering. 
C)  Public offering. 
D)  An interstate offering. 
A)  Regulation A offering. 
B)  Regulation D offering. 
C)  Public offering. 
D)  An interstate offering.

Question 20

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

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.

Exam 20: Securities Regulation

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

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

The 1934 Act requires companies with a class of stock that is publicly traded to make regular filings with the SEC.

Premier Enterprises sold Watson unregistered stock which was not exempt.The 1933 Act imposes liability on Premier,and Watson's sole remedy is damages.

Ted is the vice-president in charge of marketing for Barnard Basketry.In any three-month period,he may sell:

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

An individual engaged in illegal insider trading could be:

Securities issued by banks are subject to SEC registration.

The Foreign Corrupt Practices Act makes it a crime:

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.

Which of the following requires companies to file annual reports containing audited financial statements?

The term "securities" could not include things like animal breeding arrangements.

The Foreign Corrupt Practices Act:

What is the purpose of a registration statement and what information must be contained in it?

Valdon brought a lawsuit under Section 11 of the 1933 Act against Kenndey Corp.He will have to prove that:

Under Rule 504,a restricted security:

Any securities offerings not covered by the NSMIA must comply with state securities laws.

The 1933 Act prohibits fraud in any securities transaction,not just transactions involving public offerings.

Under what type of securities offering must the issuer determine if the investor is an accredited,sophisticated,or unaccredited investor?

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

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