Question 1

Which of the following Internet activities has particularly affected the development of securities fraud online?

Accepted Answer

A) e-mail 
B) private blogs 
C) chat rooms 
D) browsing

Question 2

Under the Securities Act of 1933, ________ allows the Securities and Exchange Commission to exempt offerings not exceeding $5 million.

Accepted Answer

A) Section 11(a) 
B) Section 17(a) 
C) Section 3(b) 
D) Section 6(b)

Question 3

Which of the following is a characteristic of the Public Company Accounting Oversight Board?

Accepted Answer

A) It regulates all firms providing financial services. 
B) It is a six-member board with legislative and disciplinary power. 
C) A majority of the board is dependent on publicly held accounting companies. 
D) The board is funded by publicly held companies overseen by the Securities and Exchange Commission.

Question 4

Which of the following is a difference between an exchange market and an over-the-counter (OTC) market?

Accepted Answer

A) An exchange market is a securities market, whereas an OTC market is a goods market. 
B) An exchange market has no membership qualifications, whereas an OTC has membership qualifications. 
C) An exchange market provides a physical facility for the buying and selling of securities, whereas an OTC market has no physical facility. 
D) An exchange market involves brokers buying directly from the public, whereas an OTC market involves brokers buying and selling stocks through registered specialists.

Question 5

The Public Utility Holding Company Act of 1935 requires that public utility and holding companies ________.

Accepted Answer

A) set rates as low as possible without sacrificing a reasonable profit 
B) register with the Securities and Exchange Commission and disclose information about their finances and operations 
C) notify the Environmental Protection Agency before building new power facilities 
D) elect board members at annual elections

Question 6

Atlas Consultancies, a financial consulting firm, has received a tender offer for a takeover from a rival firm. In order to retain the goodwill of its management, Atlas gave its employees large bonus packages and other forms of compensation. Which of the following defensive strategies is Atlas using?

Accepted Answer

A) porcupine provision 
B) golden parachute 
C) white knight 
D) greenmail

Question 7

Which of the following is true of registration of securities under the Securities Act of 1933?

Accepted Answer

A) The act authorizes the Securities and Exchange Commission to decide whether or not a public offering of stock is meritorious and should be sold to the public. 
B) The prospectus of a registration statement does not include pending lawsuits. 
C) The registration statement provides the use to be made of the funds garnered by a public offering of stock and the risks involved for investors. 
D) Part II of a registration statement is given to prospective buyers, but it is not open for public inspection at the Securities and Exchange Commission.

Question 8

Which of the following is true of state securities laws?

Accepted Answer

A) They are also referred to as "clear sky" laws. 
B) They require that securities be registered with federal authorities only. 
C) Securities are only regulated by state laws. 
D) They regulate securities purchased and sold in intrastate commerce.

Question 9

Which of the following acts requires all companies to set up a system of internal controls to provide reasonable assurance that the company's records accurately and fairly reflect its transactions?

Accepted Answer

A) The Foreign Corrupt Practices Act of 1977 
B) The Private Securities Litigation Reform Act of 1995 
C) The Market Reform Act of 1990 
D) The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

Question 10

Which of the following is true of securities?

Accepted Answer

A) They have no value in and of themselves. 
B) Since they are paper, they can be produced in limited numbers only. 
C) They are easily regulated in terms of hazards or merchantability. 
D) Since they are paper, they cannot be easily manipulated by their issuers.

Question 11

A person engaged in the business of buying and selling securities for others' accounts is called a dealer.

Accepted Answer

A) True 
 B)False

Question 12

The 1990 Remedies Act allows the federal courts to bar anyone who has violated the fraud provisions of the federal securities laws from ever serving as an officer or director of a publicly held firm.

Accepted Answer

A) True 
 B)False

Question 13

________ is responsible for setting and administering the disclosure requirements prescribed by the 1933 and the 1934 Securities Acts, the Public Utility Holding Company Act, and the Investment Company Act.

Accepted Answer

A) The Division of Market Regulation 
B) The Division of Corporation Finance 
C) The Division of Enforcement 
D) The Division of Investment Management

Question 14

Which of the following is true of the Division of Market Regulation?

Accepted Answer

A) Accountants, lawyers, financial officers, and underwriters all rely heavily on advice from this division. 
B) This division reviews all registration statements, prospectuses, and quarterly and annual reports of corporations, as well as their proxy statements. 
C) It can recommend to the full commission the suspension of an exchange for up to three years. 
D) It seeks to discourage manipulation or fraud in the issuance, sale, or purchase of securities.

Question 15

Under the Securities Act of 1933, commerce between any foreign country and the United States is referred to as ________.

Accepted Answer

A) domestic commerce 
B) intrastate commerce 
C) interstate commerce 
D) international commerce

Question 16

Discuss the risks taken by large banks and how the Dodd-Frank legislation restricts them.

Accepted Answer

The answer of Discuss the risks taken by large banks...

Question 17

Which of the following factors resulted in the federal regulation of securities in Congress?

Accepted Answer

A) corporations playing off one state against another by limiting their securities sales to states that had less stringent regulations 
B) corporations' ability to thwart state efforts at regulation rather easily 
C) securities being easily manipulated by issuers 
D) the collapse of the stock market in 1929

Question 18

State the amendments made to Rule 14(a) in 1983 with respect to exclusion of a shareholder proposal.

Accepted Answer

The answer of State the amendments made to Rule 14(a)...

Question 19

Derivatives cannot be used as hedges against risk.

Accepted Answer

A) True 
 B)False

Question 20

What is Regulation Fair Disclosure? Explain the views of those favoring and opposing Regulation FD.

Accepted Answer

The answer of What is Regulation Fair Disclosure? Explain the...

Exam 23: Rules Governing the Issuance and Trading of Securities

Which of the following Internet activities has particularly affected the development of securities fraud online?

Under the Securities Act of 1933, ________ allows the Securities and Exchange Commission to exempt offerings not exceeding $5 million.

Which of the following is a characteristic of the Public Company Accounting Oversight Board?

Which of the following is a difference between an exchange market and an over-the-counter (OTC) market?

The Public Utility Holding Company Act of 1935 requires that public utility and holding companies ________.

Which of the following is true of registration of securities under the Securities Act of 1933?

Which of the following is true of state securities laws?

Which of the following acts requires all companies to set up a system of internal controls to provide reasonable assurance that the company's records accurately and fairly reflect its transactions?

Which of the following is true of securities?

A person engaged in the business of buying and selling securities for others' accounts is called a dealer.

The 1990 Remedies Act allows the federal courts to bar anyone who has violated the fraud provisions of the federal securities laws from ever serving as an officer or director of a publicly held firm.

________ is responsible for setting and administering the disclosure requirements prescribed by the 1933 and the 1934 Securities Acts, the Public Utility Holding Company Act, and the Investment Company Act.

Which of the following is true of the Division of Market Regulation?

Under the Securities Act of 1933, commerce between any foreign country and the United States is referred to as ________.

Discuss the risks taken by large banks and how the Dodd-Frank legislation restricts them.

Which of the following factors resulted in the federal regulation of securities in Congress?

State the amendments made to Rule 14(a) in 1983 with respect to exclusion of a shareholder proposal.

Derivatives cannot be used as hedges against risk.

What is Regulation Fair Disclosure? Explain the views of those favoring and opposing Regulation FD.