Question 1

Describe the Dodd-Frank legislation with regard to credit rating agencies.

Accepted Answer

The Dodd-Frank legislation was intended

Question 2

The Trust Indenture Act of 1939 regulates the public issuance of ________ in excess of $5 million.

Accepted Answer

A) commodity fixtures 
B) preferred stock and other debt securities 
C) bonds and other debt securities 
D) stock dividends 
A) commodity fixtures 
B) preferred stock and other debt securities 
C) bonds and other debt securities 
D) stock dividends

Question 3

A red herring is an investment banking firm that purchases a securities issue from the issuing corporation with a view to eventually selling the securities to brokerage houses, which, in turn, sell them to the public.

Accepted Answer

A) True 
 B)False

Question 4

Derivatives are synthetic securities that are dependent upon the movement of underlying variables.

Accepted Answer

A) True 
 B)False

Question 5

The Securities and Exchange Commission is not charged with evaluating the worth of a public offering of securities by a corporation.

Accepted Answer

A) True 
 B)False

Question 6

The ________ provides for giving foreign regulators U.S. government documents and information needed to trace laundered money and those suspected of doing the laundering.

Accepted Answer

A) Uniform Securities Act 
B) Freedom of Information Act 
C) Foreign Corrupt Practices Act 
D) International Securities Enforcement Cooperation Act 
A) Uniform Securities Act 
B) Freedom of Information Act 
C) Foreign Corrupt Practices Act 
D) International Securities Enforcement Cooperation Act

Question 7

Schedule B of the Securities Act of 1933 sets forth disclosure requirements for initial offerings by foreign issuers of stock on U.S. exchanges.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true of the Securities Litigation Uniform Standards Act of 1998?

Accepted Answer

A) It is a safe harbor from liability for companies that make statements to the public about future risk factors. 
B) It gives the Securities and Exchange Commission cease-and-desist powers and the power to impose substantial monetary penalties in administrative proceedings. 
C) It is an amendment to the Private Securities Litigation Reform Act of 1995. 
D) It sets national standards for securities class action lawsuits involving nationally traded securities. 
A) It is a safe harbor from liability for companies that make statements to the public about future risk factors. 
B) It gives the Securities and Exchange Commission cease-and-desist powers and the power to impose substantial monetary penalties in administrative proceedings. 
C) It is an amendment to the Private Securities Litigation Reform Act of 1995. 
D) It sets national standards for securities class action lawsuits involving nationally traded securities.

Question 9

Which of the following is true of a red herring prospectus?

Accepted Answer

A) It can be distributed to potential buyers during the prefiling period, and limited sales can be finalized during this period. 
B) It can be distributed to potential buyers during the prefiling period to finalize sales. 
C) It can be distributed to potential buyers during the waiting period, but no sales can be finalized during this period. 
D) It can be distributed to potential buyers during the posteffective period to finalize any sales. 
A) It can be distributed to potential buyers during the prefiling period, and limited sales can be finalized during this period. 
B) It can be distributed to potential buyers during the prefiling period to finalize sales. 
C) It can be distributed to potential buyers during the waiting period, but no sales can be finalized during this period. 
D) It can be distributed to potential buyers during the posteffective period to finalize any sales.

Question 10

Which of the following is true of the Dodd-Frank legislation?

Accepted Answer

A) Federal Deposit Insurance Corporation-insured institutions are required to keep their interests in hedge funds and private equity funds. 
B) Investment banks have to set aside reserves to cover all forms of expenditure. 
C) Originators of mortgage securities must hold 5 percent of the credit risk, thus retaining an interest in the performance of the securities. 
D) Banks will be allowed to trade in a proprietary manner but cannot continue to buy or sell from their own accounts to hedge against other investments. 
A) Federal Deposit Insurance Corporation-insured institutions are required to keep their interests in hedge funds and private equity funds. 
B) Investment banks have to set aside reserves to cover all forms of expenditure. 
C) Originators of mortgage securities must hold 5 percent of the credit risk, thus retaining an interest in the performance of the securities. 
D) Banks will be allowed to trade in a proprietary manner but cannot continue to buy or sell from their own accounts to hedge against other investments.

Question 11

Which of the following is true of the Sarbanes-Oxley Act of 2002?

Accepted Answer

A) It follows the traditional approach to corporate governance. 
B) It established the Public Company Accounting Oversight Board. 
C) It requires external auditors to certify financial reports. 
D) It requires a separate team to be formed to certify financial reports. 
A) It follows the traditional approach to corporate governance. 
B) It established the Public Company Accounting Oversight Board. 
C) It requires external auditors to certify financial reports. 
D) It requires a separate team to be formed to certify financial reports.

Question 12

Which of the following defensive strategies refers to bankrupting a company?

Accepted Answer

A) porcupine provision 
B) scorched-earth policy 
C) shark repellent 
D) white knight 
A) porcupine provision 
B) scorched-earth policy 
C) shark repellent 
D) white knight

Question 13

Chapter 11 of the ________ gives the Securities and Exchange Commission the authority to render advice when certain debtor corporations have filed for reorganization.

Accepted Answer

A) Private Securities Litigation Reform Act 
B) Market Reform Act 
C) Bankruptcy Abuse Prevention and Consumer Protection Act 
D) Securities Enforcement Remedies and Penny Stock Reform Act 
A) Private Securities Litigation Reform Act 
B) Market Reform Act 
C) Bankruptcy Abuse Prevention and Consumer Protection Act 
D) Securities Enforcement Remedies and Penny Stock Reform Act

Question 14

The Private Securities Litigation Reform Act of 1995 gives the Securities and Exchange Commission cease-and-desist powers and the power to impose substantial monetary penalties in administrative proceedings.

Accepted Answer

A) True 
 B)False

Question 15

The Securities and Exchange Commission recognizes an issuer that is permitted to use Form S-03, thus disclosing even less detail in the 1933 Act registration, as a(n) ________.

Accepted Answer

A) nonreporting issuer 
B) seasoned issuer 
C) unseasoned issuer 
D) well-known seasoned issuer 
A) nonreporting issuer 
B) seasoned issuer 
C) unseasoned issuer 
D) well-known seasoned issuer

Question 16

Private blogs have become cyberworld locations for violations of the 1933 and 1934 Securities Acts.

Accepted Answer

A) True 
 B)False

Question 17

According to the Dodd-Frank legislation, Federal Deposit Insurance Corporation-insured institutions are allowed to have only ________ of their capital invested in hedge funds and private equity funds.

Accepted Answer

A) 2 percent 
B) 3 percent 
C) 4 percent 
D) 5 percent 
A) 2 percent 
B) 3 percent 
C) 4 percent 
D) 5 percent

Question 18

The Investment Advisers Act of 1940 requires persons and firms giving investment advice to clients to ________.

Accepted Answer

A) attend education seminars 
B) demonstrate expertise in economics and finance 
C) impose administrative sanctions on securities buyers 
D) register with the Securities and Exchange Commission 
A) attend education seminars 
B) demonstrate expertise in economics and finance 
C) impose administrative sanctions on securities buyers 
D) register with the Securities and Exchange Commission

Question 19

State the new rules regarding written communication by issuers before and during registration of securities.

Accepted Answer

The new rules regarding written communic

Question 20

The Division of Corporation Regulation administers the Public Utility Holding Company Act of 1935.

Accepted Answer

A) True 
 B)False

Exam 23: Rules Governing the Issuance and Trading of Securities

Describe the Dodd-Frank legislation with regard to credit rating agencies.

The Trust Indenture Act of 1939 regulates the public issuance of ________ in excess of $5 million.

A red herring is an investment banking firm that purchases a securities issue from the issuing corporation with a view to eventually selling the securities to brokerage houses, which, in turn, sell them to the public.

Derivatives are synthetic securities that are dependent upon the movement of underlying variables.

The Securities and Exchange Commission is not charged with evaluating the worth of a public offering of securities by a corporation.

The ________ provides for giving foreign regulators U.S. government documents and information needed to trace laundered money and those suspected of doing the laundering.

Schedule B of the Securities Act of 1933 sets forth disclosure requirements for initial offerings by foreign issuers of stock on U.S. exchanges.

Which of the following is true of the Securities Litigation Uniform Standards Act of 1998?

Which of the following is true of a red herring prospectus?

Which of the following is true of the Dodd-Frank legislation?

Which of the following is true of the Sarbanes-Oxley Act of 2002?

Which of the following defensive strategies refers to bankrupting a company?

Chapter 11 of the ________ gives the Securities and Exchange Commission the authority to render advice when certain debtor corporations have filed for reorganization.

The Private Securities Litigation Reform Act of 1995 gives the Securities and Exchange Commission cease-and-desist powers and the power to impose substantial monetary penalties in administrative proceedings.

The Securities and Exchange Commission recognizes an issuer that is permitted to use Form S-03, thus disclosing even less detail in the 1933 Act registration, as a(n) ________.

Private blogs have become cyberworld locations for violations of the 1933 and 1934 Securities Acts.

According to the Dodd-Frank legislation, Federal Deposit Insurance Corporation-insured institutions are allowed to have only ________ of their capital invested in hedge funds and private equity funds.

The Investment Advisers Act of 1940 requires persons and firms giving investment advice to clients to ________.

State the new rules regarding written communication by issuers before and during registration of securities.

The Division of Corporation Regulation administers the Public Utility Holding Company Act of 1935.

Critical Thinking and Legal Reasoning

Introduction to Law and the Legal Environment of Business

The American Legal System

Alternative Tools of Dispute Resolution

Constitutional Principles

White-Collar Crime and the Business Community

Ethics, Social Responsibility, and the Business Manager

The International Legal Environment of Business

The Law of Contracts and Sales—I

The Law of Contracts and Sales—II

The Law of Torts

Product and Service Liability Law

Law of Property: Real and Personal

Intellectual Property

Agency Law

Law and Business Associations

Law and Business Associations

The Law of Administrative Agencies

The Employment Relationship

Laws Governing Labor-Management Relations

Employment Discrimination

Environmental Law

Antitrust Laws

Laws of Debtor Creditor Relations and Consumer Protection

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