119. Although securities sold under a private placement exemption are exempt from registration, the law requires that
investors be given a , which is similar to a prospectus.
a. private–placement memorandum
b. semi-prospectus
c. non-registration prospectus
d. casual prospectus
e. casual memorandum
120. Although securities sold under a private placement exemption are exempt from registration, the law requires that
investors be given a , which is similar to a prospectus.
a. risk analysis memorandum
b. semi-prospectus
c. non-registration prospectus
d. casual prospectus
e. none of the other choices are correct
121. Most securities are issued by firms that can use a quicker registration process. These are:
a. well-known seasoned issuers that have issued at least $1 billion in securities previously
b. private placement specialists registered with the SEC
c. self-registration offering brokerages that work only with accredited investors
d. Regulation D offering specialist firms that are accredited by the SEC
e. none of the other choices; there is no such process
122. Most securities are issued by well–known seasoned issuers who have the right to:
a. file registration statements the day they announce a new offering
b. use a free-writing prospectus that is continuously updated on a website
c. use shelf registration and sell a security over several years
d. all of the other specific choices
e. none of the other choices; there is no such process
123. Most securities are issued by well–known seasoned issuers who do not have the right to:
a. file registration statements the day they announce a new offering
b. use a free-writing prospectus that is continuously updated on a website
c. sell without SEC notification
d. use shelf registration and sell a security over several years
e. none of the other choices; there are no such special privileges
124. Securities that are on shelf registration:
a. cannot be sold to the public
b. may be sold at any time over the next three years
c. must be sold within a year of registration
d. cannot be sold for more than $5 per share
e. none of the other choices are correct
125. Which of the following laws regulates the buying and selling of traded securities?
a. The Taft-Hartley Act
b. The 1933 Securities Act
c. the 1934 Securities and Exchange Act
d. the Federal Trade Commission Act
e. none of these
126. Which of the following conditions would lead to a security needing to be registered under the 1934 Securities
Exchange Act:
a. the security is listed on a securities exchange
b. the security is traded over the counter
c. the company has $5 million in assets
d. the company has 500 shareholders
e. all of the other specific choices would lead to a security needing to be registered under the 1934 Act
127. Under SEC rules, a “publicly held company” is a company:
a. with all its securities held by public, not private, investors
b. that has issued securities that are publicly traded
c. that is owned by the New York Stock Exchange
d. with financial assets belonging only to public institutions
e. that only sold its securities initially to public, as opposed to private, investors
128. Under SEC rules, a “publicly held company” is a company:
a. with all its securities held by public, not private, investors
b. that only sells its securities to public, as opposed to private, investors
c. owned by the New York Stock Exchange
d. with financial assets belonging only to public institutions
e. none of the other choices
129. According to the SEC rules, a company that has issued securities that are publicly traded is a:
a. publicly traded company
b. publicly held company
c. privately held company
d. part of the New York Stock Exchange
e. none of the other choices are correct
130. Under SEC rules, a “private company” is a company:
a. with all its securities held by investment firms
b. with fewer than 500 shareholders and shares not openly traded
c. that does not allow foreign investors to own its stock
d. with financial assets belonging only mutual funds
e. none of the other choices
131. Under SEC rules, a “private company” is a company:
a. with all its securities held by investment firms
b. with no more than 1,000 shareholders and shares not traded openly
c. that does not allow foreign investors to own its stock
d. with financial assets belonging only mutual funds
e. none of the other choices
132. According to SEC rules, a company that has fewer than 500 shareholders and does not allow its securities to be
openly traded is called a:
a. private company
b. publicly traded company
c. publicly held company
d. private enterprise
e. semi-private company
133. What financial disclosure report is not required of traded securities regulated by the SEC?
a. a monthly 8-K report
b. a quarterly 10-Q report
c. a biannual 8-Q report
d. an annual 10-K report
e. all of the other choices are required
134. A 10-K report is:
a. an extensive audited annual financial statement
b. a prospectus issued prior to an initial stock sale
c. the registration statement held for public inspection by the SEC
d. also called a red herring
e. none of the other choices
135. A 10-K report is:
a. an explanation of unexpected or unusual financial events
b. a prospectus issued prior to an initial stock sale
c. the registration statement held for public inspection by the SEC
d. also called a red herring
e. none of the other choices
136. The is an extensive audited financial statement similar in content to the information provided in the
registration process under the 1933 Act.
a. 10-K annual report
b. 8-K report
c. biannual 8-E report
d. prospectus
e. Howey report
137. The is an extensive audited financial statement similar in content to the information provided in the
registration process under the 1933 Act.
a. I-9 annual report
b. 8-K report
c. biannual 8-E report
d. prospectus
e. none of the other choices are correct
138. According to SEC rules, 8-K reports must be filed:
a. annually
b. weekly
c. monthly
d. quarterly
e. whenever significant financial developments occur
139. According to SEC rules, 10–K reports must be filed:
a. annually
b. weekly
c. monthly
d. quarterly
e. whenever significant financial developments occur
140. According to SEC rules, 10–Q reports must be filed:
a. annually
b. weekly
c. monthly
d. quarterly
e. whenever significant financial developments occur
141. The SEC rule that requires public companies to release material information to the public rather than release the
information on a selective basis, such as in meetings with security analysts, is called:
a. Regulation Fair Disclosure (FD)
b. Rule 8-K
c. Insider Trading Rule (ITR)
d. OTC Rule
e. none of the other choices
142. The SEC rule that requires public companies to release material information to the public rather than release the
information on a selective basis, such as in meetings with security analysts, is called:
a. the 10-Q Report Regulation
b. Rule 8-K
c. Insider Trading Rule (ITR)
d. OTC Rule
e. none of the other choices
143. Regulation Fair Disclosure (FD) requires:
a. public companies to release material information to the public rather than to selected individuals
b. public companies to release information about significant information within 24 hours of the event or when it
first becomes known
c. public companies to release information about securities trades by all senior executives and board members
d. public companies to provide explanations about all significant changes in the price of securities
e. none of the other choices
144. Regulation Fair Disclosure (FD) requires:
a. insiders in companies to release reports on all securities trades
b. public companies to release information about significant information within 24 hours of the event or when it
first becomes known
c. public companies to release information about securities trades by all senior executives and board members
d. public companies to provide explanations about all significant changes in the price of securities
e. none of the other choices
145. Companies are required to release material information to the public, rather than to reveal such information
selectively under:
a. the 10-Q Report Regulation
b. Regulation Fair Disclosure (FD)
c. Insider Trading Rule (ITR)
d. OTC Rule
e. none of the other choices
146. Companies are required to release material information to the public, rather than to reveal such information
selectively under:
a. the 10-Q Report Regulation
b. Rule 8-K
c. Insider Trading Rule (ITR)
d. OTC Rule
e. none of the other choices
147. A proxy is best described as:
a. an elaborate audited report
b. a registration statement
c. permission by a stockholder to someone else to vote their shares a certain way
d. permission for a stockholder to file a proposal with the board at the annual meeting
e. none of the other choices
148. A proxy is best described as:
a. a detailed audited financial report
b. a registration statement
c. an unaudited financial report
d. permission for a stockholder to file a proposal with the board at the annual meeting
e. none of the other choices
149. Since it is not practical for many stock owners to attend corporate meetings at which shareholders vote to approve
major decisions, shareholders are sent to be voted on their behalf.
a. proxies
b. substitutes
c. informants
d. secret ballots
e. open ballots
150. Corporations must have annual stockholder meetings at which major business decisions of the firm are determined.
Since many stockholders are not at meetings, the way they vote their shares is called:
a. a tender offer
b. absentee ballot
c. a proxy
d. a security stake
e. none of the other choices
151. Corporations must have annual stockholder meetings at which major business decisions of the firm are determined.
Since many stockholders are not at meetings, the way they vote their shares is called:
a. a tender offer b.
absentee ballot c.
a security stake
d. none of the other choices because those shares may not be voted
e. none of the other choices
152. When a company wants to take over another, it may issue:
a. a tender offer
b. a proxy
c. a merit regulation offer
d. a margin requirement
e. none of the other choices
153. When a company wants to take over another, it may issue:
a. a shelf listing offer
b. a proxy
c. a merit regulation offer
d. a margin requirement
e. none of the other choices
154. A tender offer takes place when:
a. a corporation dissolves
b. a partnership terminates
c. one company attempts to take over another company
d. one party makes their securities available for sale
e. the government refuses to regulate an industry
155. A tender offer takes place when:
a. a corporation dissolves
b. a partnership terminates
c. the government refuses to regulate an industry
d. one party makes their securities available for sale
e. none of the other choices
156. Most securities fraud cases arise from:
a. false and misleading information in the registration materials
b. information obtained during later disclosure, such as public statements made by corporate representatives
c. failure to register properly
d. government issued securities
e. none of the other choices are correct
157. Under , any person who buys a security covered by a registration statement that contains false or misleading
information, or that omits information that was important to a decision to purchase, may sue to recover losses
incurred in that purchase.
a. Section 11 of the 1933 Securities Act
b. Section 11 of the 1943 Securities Exchange Act
c. the common law
d. Section 13 of the 1933 Securities Act
e. Section 35 of the 1933 Securities Act
158. Section 11 of the 1933 Securities Act imposes civil liability for:
a. misleading statements in securities registration material
b. poorly run businesses
c. unsuccessful investment schemes
d. late registration of securities
e. unreasonable risk in investment
159. In a suit for fraud against the issuer of a security, which element would not have to be shown?
a. a security was involved
b. there was a misleading statement or material omission
c. bad information was contained in an SEC filing
d. all elements must be shown
e. none of these elements are necessary, but make for a stronger case
160. In a suit for fraud against the issuer of a security, which element would not have to be shown?
a. a security was involved
b. there was a misleading statement or material omission
c. a financial loss was suffered
d. all elements must be shown
e. none of these elements are necessary, but they make for a stronger case
161. A security is sold to the public under a private placement exemption. Later a suit is filed under federal securities
law claiming securities fraud. This suit will:
a. fail since the security is not subject to the federal law since it was sold under an exemption
b. fail since the security is not subject to the federal law since it was sold under an exemption⎯unless there
were subsequent financial disclosures to the SEC
c. fail since the security is not subject to the federal law since it was sold under an exemption⎯unless a private
common law fraud suit has already prevailed
d. be allowed since all securities are subject to the law
e. none of the other choices
162. A security is sold to the public under a private placement exemption. Later a suit is filed under the federal securities
law claiming securities fraud. This suit will:
a. fail since the security is not subject to the federal law since it was sold under an exemption
b. fail since the security is not subject to the federal law since it was sold under an exemption⎯unless there
were subsequent financial disclosures to the SEC
c. fail since the security is not subject to the federal law since it was sold under an exemption⎯unless a private
common law fraud suit has already prevailed
d. be allowed only if there was a blue sky law violation
e. none of the other choices
163. The SEC’s Rule 10b–5:
a. was adopted under Section 10(b) of the 1934 Act
b. concerns securities fraud and prohibits “manipulative” deceptive device
c. applies to registered and unregistered securities
d. was adopted under Section 10(b) of the 1934 Act concerns securities fraud and prohibits “manipulative”
deceptive device
e. was adopted under Section 10(b) of the 1934 Act concerns securities fraud and prohibits “manipulative”
deceptive device and applies to registered and unregistered securities
164. The SEC’s Rule 10b–5:
a. applies to registered securities only
b. concerns securities fraud and prohibits “manipulative” deceptive device
c. applies to registered and unregistered securities
d. applies to registered securities only and concerns securities fraud and prohibits “manipulative” deceptive
device
e. concerns securities fraud and prohibits “manipulative” deceptive device and applies to registered and
unregistered securities
165. Fraud in securities dealings may be litigated under:
a. common law fraud rules
b. SEC Rule 10b–5
c. SEC Rule 246
d. common law fraud rules or SEC Rule 10b-5
e. common law fraud rules or SEC Rule 10b-5 or SEC Rule 246
166. Fraud in securities dealings may be litigated on the basis of:
a. SEC Rule 14g
b. SEC Rule 10b–5
c. SEC Rule 246
d. SEC Rule 14g or Rule 10b–5
e. SEC Rule 14g or Rule 10b-5 or Rule 246
167. SEC Rule 10b-5 holds it illegal for anyone involved in securities dealings to:
a. employ any device, scheme, or artifice to defraud
b. make any untrue statement of a material fact or to omit to state a material fact
c. engage in any sale of property that would impose deceit upon any person
d. employ any device, scheme, or artifice to defraud or make any untrue statement of a material fact or to omit
to state a material fact
e. employ any device, scheme, or artifice to defraud or make any untrue statement of a material fact or to omit
to state a material fact or engage in any sale of property that would impose deceit upon any person
168. SEC Rule 10b-5 holds it illegal for anyone involved in securities dealings to:
a. sell any security without registration
b. make any untrue statement of a material fact or to omit to state a material fact
c. engage in any sale of property that would impose deceit upon any person
d. sell any security without registration or make any untrue statement of a material fact or to omit to state a
material fact
e. sell any security without registration or make any untrue statement of a material fact or to omit to state a
material fact or engage in any sale of property that would impose deceit upon any person
169. Suppose there has been securities fraud in the preparation of materials sent to investors, who then lose money.
Potentially, which of the following may be liable?
a. directors of the company
b. high-level officers of the company
c. accountants, lawyers and other professionals who helped prepare the material
d. directors of the company and high-level officers of the company
e. directors of the company and high-level officers of the company and accountants, lawyers and other
professionals who helped prepare the material
170. Suppose there has been securities fraud in the preparation of materials sent to investors, who then lose money.
Potentially, which of the following may be liable?
a. directors of the company
b. high-level officers of the company
c. SEC reviewing staff that committed “significant errors”
d. directors of the company and high-level officers of the company
e. directors of the company and high-level officers of the company and SEC reviewing staff that committed
“significant errors”
171. Which of the following would never be liable for securities fraud in the preparation of materials sent to investors:
a. directors of the company
b. accountants
c. lawyers who helped prepare disclosure materials
d. all of the other specific choices could be liable
e. none of the other specific choices could ever be liable
172. The SEC may sue those alleged to be violating securities laws. Most SEC actions in these cases are:
a. public and so expose the involved parties to publicity
b. not public and so do not expose the involved parties to publicity
c. only known to a few individuals
d. generally kept quiet and rarely heard of by the public
e. highly restricted
173. Under the 1934 Securities Exchange Act liability may be imposed on corporate officials for misstatements or
omissions made in which of the following?
a. public statements by the officials
b. SEC disclosure documents
c. press releases issued by the company
d. public statements by the officials and SEC disclosure documents
e. public statements by the officials and SEC disclosure documents and press releases issued by the company
174. Under the securities law, liability for misstatements:
a. can be imposed on securities offerors, but not corporate officials
b. can be imposed for overly optimistic statements made by executives that are not soundly grounded
c. would not be imposed for misstatements in press releases due to First Amendment protection of media
d. none of the other choices
e. all of the other choices
175. Under the securities law, liability for misstatements:
a. can be imposed on securities offerors, but not corporate officials
b. cannot be imposed for overly optimistic statements made by executives
c. would not be imposed for misstatements in press releases due to First Amendment protection of media
d. none of the other choices
e. can only be imposed by the SEC, not by private party litigation