Exam 36: Regulation of Financial Markets

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Brianna calls her stockbroker at Makememoney Brokers and finds out that Profitz, Inc. is raising capital by selling its stock to the public. She believes the stock is priced low and she will make a profit in the future, so she orders her broker to purchase 2,000 shares of Profitz Inc. stock. Which party is the investor, which is the issuer, and which is the intermediary? Explain the role each party plays in this transaction.

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Question 1

Correct Answer:

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Brianna is the investor. Investors seek a return from their investment based on the perceived value of the securities in which they invest. Investors come in all shapes and sizes, so to speak, including individual investors, who hold securities directly or through a brokerage firm, and institutional investors, such as pension funds and mutual funds.Profitz, Inc. is the issuer. Issuers are those institutions and entities that sell securities to investors. They include business corporations, state and local governments, and other entities that are seeking to raise capital through the sale of securities or bonds.Makememoney Brokers is the intermediary. Intermediaries are financial institutions that provide services for investors and issuers related to securities transactions. Most commonly, intermediaries are brokerage firms (referred to as broker-dealers) that buy and sell securities on behalf of a client. Intermediaries also include mutual funds, investment banks, and some commercial banks.

Two of the best-known exchanges are the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME).

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Question 2

Correct Answer:

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True

In the secondary market, investors sell to __________ with the goal of making a profit or preventing a loss.

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Question 3

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Both primary and secondary capital markets function through the interaction of __________ parties.

(Multiple Choice)

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Question 4

Intermediaries may include:

(Multiple Choice)

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Question 5

Issuing securities to the public for the first time is known as a/an:

(Multiple Choice)

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Question 6

Capital markets consist of:

(Multiple Choice)

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Question 7

In response to the 2008 financial crisis and the problem of systemic risk, Congress enacted, and President Obama signed into law, the Dodd-Frank Wall Street Reform and Consumer Protection Act.

(True/False)

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Question 8

An example of a systemic risk is:

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Question 9

The SEC has broad discretion to base the amount of the whistleblower award on the significance of the information provided, the level of assistance provided by the whistleblower, and the government's interest in deterring securities fraud.

(Multiple Choice)

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Question 10

A large firm that is highly interconnected with others can be a source of __________, which is the possibility that an event at the firm could trigger severe instability in financial markets or the collapse of an entire industry or economy.

(Multiple Choice)

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Question 11

Systemic risk was a major contributor to the financial crisis of __________ and led to the passage of Dodd-Frank Act.

(Multiple Choice)

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Question 12

__________ are designed to provide short-term debt financing and investment.

(Multiple Choice)

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Question 13

What is not a core function of the Consumer Financial Protection Bureau?

(Multiple Choice)

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Question 14

The term "market" is often used to refer to __________ which are organizations that facilitate trade in securities or commodities.

(Multiple Choice)

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Question 15

Unlike a systemic risk, the effects of a market risk are isolated to the entities dealing in that specific item.

(True/False)

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Question 16

The Dodd-Frank Act also created a new federal administrative agency called the __________ in order "to provide a single point of accountability for enforcing federal consumer finance laws and protecting consumers in the financial marketplace."

(Multiple Choice)

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Question 17

Companies that issue __________ traded shares must submit quarterly and annual reports to the SEC.

(Multiple Choice)

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Question 18

The Securities and Exchange Commission (SEC) is an independent agency consisting of __________ commissioners appointed by the president.

(Multiple Choice)

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Question 19

The Financial Stability Oversight Council's also has __________ nonvoting members, representing the FSOC's research arm and state-level financial and insurance regulators.

(Multiple Choice)

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Question 20

Showing 1 - 20 of 45

Exam 36: Regulation of Financial Markets

Two of the best-known exchanges are the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME).

In the secondary market, investors sell to __________ with the goal of making a profit or preventing a loss.

Both primary and secondary capital markets function through the interaction of __________ parties.

Intermediaries may include:

Issuing securities to the public for the first time is known as a/an:

Capital markets consist of:

In response to the 2008 financial crisis and the problem of systemic risk, Congress enacted, and President Obama signed into law, the Dodd-Frank Wall Street Reform and Consumer Protection Act.

An example of a systemic risk is:

The SEC has broad discretion to base the amount of the whistleblower award on the significance of the information provided, the level of assistance provided by the whistleblower, and the government's interest in deterring securities fraud.

A large firm that is highly interconnected with others can be a source of __________, which is the possibility that an event at the firm could trigger severe instability in financial markets or the collapse of an entire industry or economy.

Systemic risk was a major contributor to the financial crisis of __________ and led to the passage of Dodd-Frank Act.

__________ are designed to provide short-term debt financing and investment.

What is not a core function of the Consumer Financial Protection Bureau?

The term "market" is often used to refer to __________ which are organizations that facilitate trade in securities or commodities.

Unlike a systemic risk, the effects of a market risk are isolated to the entities dealing in that specific item.

The Dodd-Frank Act also created a new federal administrative agency called the __________ in order "to provide a single point of accountability for enforcing federal consumer finance laws and protecting consumers in the financial marketplace."

Companies that issue __________ traded shares must submit quarterly and annual reports to the SEC.

The Securities and Exchange Commission (SEC) is an independent agency consisting of __________ commissioners appointed by the president.

The Financial Stability Oversight Council's also has __________ nonvoting members, representing the FSOC's research arm and state-level financial and insurance regulators.

Legal Foundations and Thinking Strategically

Business, Societal, and Ethical Contexts of Law

Business and the Constitution

The American Judicial System, Jurisdiction, and Venue

Resolving Disputes: Litigation and Alternative Dispute Resolution

Contracts: Overview, Definition, Categories, and Source of Law

Mutual Assent: Agreement and Consideration

Capacity and Legality

Enforceability

Performance

Breach and Remedies

Contracts for the Sale of Goods: Overview of Article 2

Sales Contracts: Agreement, Consideration, and the Statute of Frauds

Title, Allocation of Risk, and Insurable Interest

Performance and Cure in Sales Contracts

Breach and Remedies in a Sales Transaction

UCC Article 2A: Lease Contracts

Sales Warranties

Definition, Creation, and Categories of Negotiable Instruments

Negotiation, Endorsements, and Holder in Due Course

Liability, Defenses, and Discharge

Checks, Deposits, and Financial Institutions

Secured Transactions

Creditors Rights

Alternatives for Insolvent Borrowers

Bankruptcy

Choice of Business Entity and Sole Proprietorships

Partnerships

Limited Liability Partnerships and Limited Liability Companies

Corporations: Formation and Organization

Corporate Transactions: Acquisitions and Mergers

Overview of the Securities Market: Definition, Categories, and Regulation

Regulation of Issuance: The Securities Act of 1933

Regulation of Trading: The Securities Exchange Act of 1934

Regulation of Corporate Governance

Agency Formation, Categories, and Authority

Duties and Liabilities of Principals and Agents

Employment at Will

Employment Regulation and Labor Law

Employment Discrimination

Torts and Products Liability

Administrative Law

Consumer Protection

Criminal Law and Procedure

Insurance Law

Environmental Law

Personal Property, Real Property, and Land Use Law

Wills, Trusts, and Estates

Intellectual Property

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