Question 1

Noelle,a Montana resident,purchases Valley Vineyard securities in January.In July,after the restaurant opens,Noelle wants to sell the securities to a well-known investor from Idaho.Is the sale permissible?

Accepted Answer

A)  No,Noelle cannot resell to a nonresident for at least nine months after the period of sale.
B)  No,Noelle cannot resell to a nonresident for at least twelve months after the period of sale.
C)  Yes,Noelle can resell after six months from the time of sale,regardless of the residency of the purchaser.
D)  Yes,Noelle can resell to a nonresident after six months from the time of sale.
E)  Yes,Noelle can resell to a nonresident after three months from the time of sale.F) C) and D)
G) All of the above

Question 2

[Cosmetic Securities] Alessia,the President of Quik Cosmetics,wanted to take her company public.She begins meeting with underwriters and sends out a press release mentioning the potential issuance of securities.She then files a registration document and prospectus.In her registration document,she described the securities,how the money from the sale of the securities will be used,described her business and property,and included information about a pending lawsuit in the process of being settled.
-What information is missing from Quik Cosmetics' registration statement?

Accepted Answer

A)  Information about the management of the company and financial statements certified by an independent public accountant.
B)  Financial statements certified by an independent public accountant.
C)  Information about the management of the company and financial statements certified by the board of directors.
D)  Information about the management of the company.
E)  No information is missing.F) A) and D)
G) All of the above

Question 3

Which of the following references profit made by a statutory insider from the purchase and sale of their own company stock within a six-month period?

Accepted Answer

A)  Insider profits
B)  Short-term profits
C)  Contempt profits
D)  Short-swing profits
E)  Insider profiting profitsF) C) and D)
G) A) and C)

Question 4

Considering Aurelia provided information about the asset sale to Johan,which of the following terms best describes Aurelia's role?

Accepted Answer

A)  Tippee
B)  Tipper
C)  Provider
D)  Providee
E)  There is no descriptive term for Aurelia because she did nothing wrong.F) All of the above
G) A) and E)

Question 5

The Board of Directors of Faith Church,Inc.wants to issue securities to raise funds.Its attorney tells the Board that it does not need to file a registration document with the SEC.Is the attorney correct?

Accepted Answer

A)  Yes,even though the securities themselves are not exempt,the transaction is exempt.
B)  Yes,because securities can only be issued by a corporation.
C)  No,securities issued by governmental bodies are exempt,securities issued by non-profit organizations are not.
D)  No,because the transaction is not exempt.
E)  Yes,because the securities are exempt because the issuer is a non-profit organization.F) B) and E)
G) B) and C) E

Question 6

A[n] ________ prospectus is a prospectus with a warning written in red print at the top of the page warning investors that the registration has been filed with the SEC but has not yet been approved.

Accepted Answer

A)  Advertising
B)  Red-line
C)  Bait
D)  Red-herring
E)  Red-fishF) A) and B)
G) A) and E)

Question 7

Describe what a registration statement filed with the SEC generally contains.

Accepted Answer

A registration state...

Question 8

Is Kassie's attorney correct that she does not have to provide financial information contained in the registration statement because the proposed offering is a private placement offering?

Accepted Answer

A)  If Kassie offers securities to any unaccredited investor,then she must provide all investors with the basic information that would be contained in a registration statement.
B)  If Kassie offers securities to any unaccredited investor,then she must provide the unaccredited investors with the basic information that would be contained in a registration statement.
C)  She does not have to disclose any information because it is a private offering.
D)  If Kassie offers securities to any investor,then she must provide all investors with the basic information that would be contained in a registration statement.
E)  All issuers must,at a minimum,disclose the information that would have been in a registration statement.F) All of the above
G) A) and E)

Question 9

Which is the correct term for a person who controls,is controlled by,or is in common control with the issuer?

Accepted Answer

A)  An associate
B)  A tipper
C)  An affiliate
D)  A partner
E)  A holderF) D) and E)
G) C) and D) C

Question 10

If a violation of federal securities laws is serious enough to merit criminal prosecution,the Fraud Section of the Securities and Exchange Commission prosecutes the action.

Accepted Answer

A) True 
 B)False

Question 11

Were Alessia's negotiations with underwriters permissible?

Accepted Answer

A)  Yes,but only if the negotiations occurred within the sixty days prior to filing the registration document.
B)  Yes,but only if the negotiations occurred within the thirty days prior to filing the registration document.
C)  Yes,but only if the negotiations occurred after filing the registration document.Yes,but
D)  No,an issuer cannot negotiate with underwriters prior to the filing of the registration document.
E)  Yes.F) C) and E)
G) C) and D)

Question 12

Any security offered or sold to a permanent resident of the single state where the issuer of the security resides and does business is exempt under the 1933 act.

Accepted Answer

A) True 
 B)False  True

Question 13

List the four major responsibilities of the SEC as set forth in the text.

Accepted Answer

The SEC ha...

Question 14

Which of the following regulates how companies issue securities?

Accepted Answer

A)  The Securities Exchange Act of 1934
B)  The Oversight Act of 1935
C)  The Securities Act of 1933
D)  The Stock and Bond Act of 1930
E)  The Depression Act of 1932F) C) and D)
G) A) and C)

Question 15

If Valley Vineyard is not required to register with the SEC,how much capital can it raise?

Accepted Answer

A)  Valley Vineyard can raise up to five million dollars.
B)  Valley Vineyard can raise up to one million dollars.
C)  Valley Vineyard can raise up to five million dollars the first year,and then it is unlimited.
D)  There is no limit.
E)  Valley Vineyard can raise up to ten million.F) D) and E)
G) C) and E)

Question 16

Which of the following statements is false about marketing securities on the internet?

Accepted Answer

A)  SEC regulations do not apply to online advertising and securities transactions.
B)  The SEC has issued cease-and-desist orders against companies that illegally offered free stock on their websites because they had not registered their stocks with the SEC.
C)  Companies are permitted to sell securities online in an initial public offering IPO) .
D)  The SEC maintains a database to help investors access information about IPOs.
E)  Some websites allow customers to buy and sell securities online.F) B) and E)
G) A) and E)

Question 17

Which of the following statements is false about securities and securities regulation?

Accepted Answer

A)  The government heavily regulates securities.
B)  Securities regulation is relatively new.
C)  Without securities regulations,corporations could easily commit fraud by issuing securities and refusing to repay them.
D)  Congress passed securities laws after the stock market crash in 1929.
E)  A security has intrinsic value.F) A) and B)
G) B) and D)

Question 18

Which of the following,if any,may be defenses for Isaiah?

Accepted Answer

A)  Except for the violation of selling securities before the effective registration date,Isaiah could raise the defense that a plaintiff was aware of the omission or false statement when the security was purchased;but no defense is available based on the theory that omitted or false statements were immaterial to the sale of the security.
B)  No defenses are available to Isaiah because he had already been held liable to the SEC once.
C)  For any alleged violations,Isaiah could raise the defense that a plaintiff was aware of the omission or false statement when the security was purchased;but no defense is available based on the theory that omitted or false statements were immaterial to the sale of the security.
D)  Except for the violation of selling securities before the effective registration date,Isaiah could raise the defenses that a plaintiff was aware of the omission or false statement when the security was purchased,and that any omitted or false statement was immaterial to the sale of the security.
E)  For any alleged violations Isaiah could raise the defenses that a plaintiff was aware of the omission or false statement when the security was purchased,and that any omitted or false statement was immaterial to the sale of the security.F) B) and C)
G) A) and D)

Question 19

Which of the following is a reason Congress passed the Private Securities Litigation Reform Act of 1995?

Accepted Answer

A)  To provide protection to accredited investors who trade on insider information.
B)  To provide protection to insiders who trade on forecasts of earnings.
C)  To provide protection to companies who issue forecasts of earnings.
D)  To provide stronger penalties against companies who issue forecasts of earnings that turn out to be wrong.
E)  To provide stronger penalties against insiders who trade on forecasts of earnings.F) A) and E)
G) C) and E)

Question 20

Which of the following is true regarding Isaiah's sale of securities before the effective date of registration?

Accepted Answer

A)  He will be able to avoid liability if he can establish that the investors who purchased stock early were aware that the securities were sold before the effective date of registration.
B)  It is not a violation of the securities laws.
C)  He will be able to avoid liability if he can establish that the sales before the effective date did not directly result in any losses to investors.
D)  He will almost certainly be liable because the 1933 act provides no defenses for that violation.
E)  He will be able to avoid liability if he can establish the due diligence defense.F) C) and E)
G) A) and E)

Exam 41: Corporations: Securities and Investor Protection

Noelle,a Montana resident,purchases Valley Vineyard securities in January.In July,after the restaurant opens,Noelle wants to sell the securities to a well-known investor from Idaho.Is the sale permissible?

Correct Answer
verified

Correct Answer
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Which of the following references profit made by a statutory insider from the purchase and sale of their own company stock within a six-month period?

Correct Answer
verified

Considering Aurelia provided information about the asset sale to Johan,which of the following terms best describes Aurelia's role?

Correct Answer
verified

The Board of Directors of Faith Church,Inc.wants to issue securities to raise funds.Its attorney tells the Board that it does not need to file a registration document with the SEC.Is the attorney correct?

Correct Answer
verified
E

A[n] ________ prospectus is a prospectus with a warning written in red print at the top of the page warning investors that the registration has been filed with the SEC but has not yet been approved.

Correct Answer
verified

Describe what a registration statement filed with the SEC generally contains.

Correct Answer
verified
A registration state...
View Answer

Is Kassie's attorney correct that she does not have to provide financial information contained in the registration statement because the proposed offering is a private placement offering?

Correct Answer
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Which is the correct term for a person who controls,is controlled by,or is in common control with the issuer?

Correct Answer
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C

If a violation of federal securities laws is serious enough to merit criminal prosecution,the Fraud Section of the Securities and Exchange Commission prosecutes the action.

Correct Answer
verified

Were Alessia's negotiations with underwriters permissible?

Correct Answer
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Any security offered or sold to a permanent resident of the single state where the issuer of the security resides and does business is exempt under the 1933 act.

Correct Answer
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True

List the four major responsibilities of the SEC as set forth in the text.

Correct Answer
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The SEC ha...
View Answer

Which of the following regulates how companies issue securities?

Correct Answer
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If Valley Vineyard is not required to register with the SEC,how much capital can it raise?

Correct Answer
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Which of the following statements is false about marketing securities on the internet?

Correct Answer
verified

Which of the following statements is false about securities and securities regulation?

Correct Answer
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Which of the following,if any,may be defenses for Isaiah?

Correct Answer
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Which of the following is a reason Congress passed the Private Securities Litigation Reform Act of 1995?

Correct Answer
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Which of the following is true regarding Isaiah's sale of securities before the effective date of registration?

Correct Answer
verified

Exam 41: Corporations: Securities and Investor Protection

Noelle,a Montana resident,purchases Valley Vineyard securities in January.In July,after the restaurant opens,Noelle wants to sell the securities to a well-known investor from Idaho.Is the sale permissible?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following references profit made by a statutory insider from the purchase and sale of their own company stock within a six-month period?

Correct AnswerverifiedShow Answer

Considering Aurelia provided information about the asset sale to Johan,which of the following terms best describes Aurelia's role?

Correct AnswerverifiedShow Answer

The Board of Directors of Faith Church,Inc.wants to issue securities to raise funds.Its attorney tells the Board that it does not need to file a registration document with the SEC.Is the attorney correct?

Correct AnswerverifiedE

A[n] ________ prospectus is a prospectus with a warning written in red print at the top of the page warning investors that the registration has been filed with the SEC but has not yet been approved.

Correct AnswerverifiedShow Answer

Describe what a registration statement filed with the SEC generally contains.

Correct AnswerverifiedA registration state...View AnswerShow Answer

Is Kassie's attorney correct that she does not have to provide financial information contained in the registration statement because the proposed offering is a private placement offering?

Correct AnswerverifiedShow Answer

Which is the correct term for a person who controls,is controlled by,or is in common control with the issuer?

Correct AnswerverifiedC

If a violation of federal securities laws is serious enough to merit criminal prosecution,the Fraud Section of the Securities and Exchange Commission prosecutes the action.

Correct AnswerverifiedShow Answer

Were Alessia's negotiations with underwriters permissible?

Correct AnswerverifiedShow Answer

Any security offered or sold to a permanent resident of the single state where the issuer of the security resides and does business is exempt under the 1933 act.

Correct AnswerverifiedTrue

List the four major responsibilities of the SEC as set forth in the text.

Correct AnswerverifiedThe SEC ha...View AnswerShow Answer

Which of the following regulates how companies issue securities?

Correct AnswerverifiedShow Answer

If Valley Vineyard is not required to register with the SEC,how much capital can it raise?

Correct AnswerverifiedShow Answer

Which of the following statements is false about marketing securities on the internet?

Correct AnswerverifiedShow Answer

Which of the following statements is false about securities and securities regulation?

Correct AnswerverifiedShow Answer

Which of the following,if any,may be defenses for Isaiah?

Correct AnswerverifiedShow Answer

Which of the following is a reason Congress passed the Private Securities Litigation Reform Act of 1995?

Correct AnswerverifiedShow Answer

Which of the following is true regarding Isaiah's sale of securities before the effective date of registration?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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E

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A registration state...
View Answer

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C

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True

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The SEC ha...
View Answer

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