60. Which class of securities is (are) exempt from the federal securities laws?
a. issues by governments
b. issues by corporations with assets under $1 million
c. issues by corporations with over $1 billion in assets
d. all of the other specific choices
e. none of the other choices
61. Which class of securities is (are) exempt from the federal securities laws?
a. issues by companies with ten-year profit records
b. issues by corporations with assets under $1 million
c. issues by corporations with over $1 billion in assets
d. all of the other specific choices
e. none of the other choices
62. Which of the following securities would be exempt from regulation:
a. debts issued by the federal government
b. debts issued by a state government
c. debts guaranteed by a state government
d. debts issued by a local government
e. all of the other specific choices are correct
63. Which of the following securities would NOT be exempt from regulation:
a. debts issued by the federal government
b. debts issued by a state government
c. debts guaranteed by a state government
d. debts issued by a local government
e. all of the other specific choices are exempt from regulation
64. Which of the following securities would NOT be exempt from regulation:
a. debts issued by the federal government
b. debts issued by a corporation with assets of more than $1 billion
c. debts guaranteed by a state government
d. debts issued by a local government
e. all of the other specific choices are exempt from regulation
65. Which of the following are exempt from the Securities Exchange Act of 1933:
a. securities issued by banks
b. securities issued by religious and other charitable organizations
c. insurance policies
d. securities issued by religious and other charitable organizations and insurance policies
e. securities issued by banks and securities issued by religious and other charitable organizations and insurance
policies
66. The registration requirement of the Securities Act of 1933 applies to:
a. charitable or religious organizations’ securities
b. government bonds
c. insurance policies
d. all of the other specific choices
e. none of the other choices
67. The registration requirement of the Securities Act of 1933 applies to:
a. charitable or religious organizations’ securities
b. securities issued by mutual funds
c. insurance policies
d. all of the other specific choices
e. none of the other choices
68. The truth-in–securities law refers to:
a. the Securities Act of 1933
b. the Securities Exchange Act of 1934
c. the Howey Act of 1933
d. the Fraudulent Securities Act of 1934
e. the Securities Exchange Commission Act of 1934
69. All the relevant information that an investor would want to know about a company before investing in it is known
as:
a. real information
b. investment information
c. material information
d. informed information
e. security information
70. The idea behind the disclosure provisions contained in federal securities law is that:
a. investors will not collect information about securities unless the government makes the information available
b. investors need sufficient and accurate information on material facts concerning securities they might buy
c. securities are generally overvalued in the absence of such information
d. the sellers of stock will rarely disclose financial data without the disclosure requirement
e. all of the other choices
71. The idea behind the disclosure provisions contained in federal securities law is that:
a. investors will not collect information about securities unless the government makes the information available
b. the sellers of stock will not disclose financial data without the disclosure requirement
c. securities are generally overvalued in the absence of such information
d. all of the other specific choices
e. none of the other choices
72. A(n) is a document providing the legal offering of the sale of a security.
a. prospectus
b. registration statement
c. issue
d. Howey document
e. sale form
73. A(n) is a document providing the legal offering of the sale of a security.
a. sale form
b. Security and Exchange document
c. issue
d. Howey document
e. none of the other choices are correct
74. A red herring:
a. is also known as an 8-K report
b. is also called a prospectus
c. represents an offer to sell a security
d. is a preliminary version of a prospectus
e. none of the other choices
75. Before the final version of a prospectus is approved by the SEC, the document is called a(n):
a. red herring
b. preliminary prospectus
c. initial prospectus
d. ghost document
e. shadow prospectus
76. Before the final version of a prospectus is approved by the SEC, the document is called a(n):
a. shadow prospectus
b. preliminary prospectus
c. initial prospectus
d. ghost document
e. none of the other choices are correct
77. The term “red herring“ that is used for a prospectus before it is approved by the SEC comes from:
a. the traditional red ink and reddish paper used in writing a prospectus
b. ancient Roman law traditions
c. a reference to being “in the red”
d. no one knows
e. the red paper used when the Securities Act of 1933 was enacted
78. Which of the following is NOT included in a prospectus:
a. the security issuer’s finances and business
b. the purpose of the offering
c. the plans for the funds collected
d. the risks involved in the business venture
e. all of the other specific choices would be included in a prospectus
79. A securities registration statement consists of:
a. information about risks involved in a business venture
b. a prospectus
c. 8-K reports
d. information about risks involved in a business venture and a prospectus
e. information about risks involved in a business venture and a prospectus and 8-K reports
80. The securities registration process requires all the following information to be provided to prospective investors
except:
a. the security issuer’s finances
b. the background of the promoters
c. plans for the funds collected from the sale
d. financial statements by certified public accountants
e. all of the other choices are required
81. The securities registration process requires all the following information to be provided to prospective investors
except:
a. the security issuer’s finances
b. the background of the promoters
c. plans for the funds collected from the sale
d. the background of the promoters and plans for the funds collected from the sale only
e. all of the other specific choices are required
82. The securities registration process requires all the following information to be provided to prospective investors
except:
a. the security issuer’s finances
b. the purpose of the offering
c. SEC analysis of the offering
d. financial statements by certified public accountants
e. all of the other choices are required
83. When the SEC reviews a prospectus for a new stock offering it may not:
a. rule on the merits of the offering
b. issue a deficiency letter ordering the issuer to amend the prospectus
c. issue a stop order to prevent the issue from going out for sale until corrections are made to the prospectus
d. none of the other choices may be done; the SEC only records the prospectus for public inspection
e. all of the other specific choices may be done
84. When the SEC reviews a prospectus for a new stock offering it may not:
a. demand more information from the promoters
b. issue a deficiency letter ordering the issuer to amend the prospectus
c. issue a stop order preventing the issue from going forward
d. none of the other choices may be done; the SEC only records the prospectus for public inspection
e. all of the other specific choices may be done
85. Registration of a prospectus for a new stock offering becomes effective:
a. 20 days after it is filed
b. 30 days after it is filed
c. between 15 and 20 days after it is filed
d. within a week of being filed
e. 60 days after being filed
86. Registration of a prospectus for a new stock offering becomes effective:
a. 60 days after being filed
b. 30 days after it is filed
c. between 15 and 20 days after it is filed
d. within a week of being filed
e. none of the other choices are correct
87. The Securities and Exchange Commission has the power to:
a. issue a deficiency letter ordering the security issuer to amend the filing before sales
b. rule on the merits or financial soundness of a security offering
c. determine the number of shares of stock that a corporation may sell in any given offer
d. issue a deficiency letter ordering the security issuer to amend the filing before sales and rule on the merits or
financial soundness of a security offering
e. all of the other specific choices
88. In the event that the SEC staff believes that a prospectus that has been submitted for review does not adequately
explain the high-risk factors of an offering, it can:
a. do nothing so long as the required elements have been provided
b. issue a deficiency letter delaying the offering until more detail is provided
c. obtain a Commission order barring the sale of the security
d. obtain a court order barring the sale of the security
e. require shelf registration proceedings to begin
89. In the event that the SEC staff believes that a prospectus that has been submitted for review does not adequately
explain the high-risk factors of an offering, it can:
a. do nothing so long as the required elements have been provided
b. require shelf registration proceedings to begin
c. obtain a Commission order barring the sale of the security
d. obtain a federal court order barring the sale of the security
e. none of the other choices
90. A prospective issuer of securities must hire which of the following:
a. a securities attorney
b. a certified public accountant
c. a printer for the prospectus
d. an underwriter
e. all of the other specific choices must be hired
91. A prospective issuer of securities need NOT hire which of the following:
a. a securities attorney
b. a certified public accountant
c. a printer for the prospectus
d. an underwriter
e. all of the other specific choices must be hired
92. A prospective issuer of securities must hire which of the following:
a. a publicity agency
b. an advertising agency
c. a printer for the prospectus
d. all of the other specific choices must be hired
e. none of the other specific choices must be hired
93. A prospective issuer of securities must hire which of the following:
a. a publicity agency
b. an advertising agency
c. a securities attorney
d. all of the other specific choices must be hired
e. none of the other specific choices must be hired
94. A prospective issuer of securities must hire which of the following:
a. a publicity agency
b. an advertising agency
c. a certified public accountant
d. all of the other specific choices must be hired
e. none of the other specific choices must be hired
95. A prospective issuer of securities must hire which of the following:
a. a publicity agency
b. an advertising agency
c. an underwriter
d. all of the other specific choices must be hired
e. none of the other specific choices must be hired
96. In a public security offering, the party hired to market the securities to the public is called:
a. the issuer
b. a stock brokerage
c. the distributor
d. the underwriter
e. none of the other choices
97. A possible way to save the expenses of registering a new security offering is to keep a security exempt from
registration. One of these exemptions is called:
a. a shelf registration exemption
b. a risky venture exemption
c. a private placement exemption
d. a blue sky exemption
e. none of the other choices
98. A possible way to save the expenses of registering a new security offering is to keep a security exempt from
registration. One of these exemptions is called:
a. a shelf registration exemption
b. a risky venture exemption
c. a 401k exemption
d. a blue sky exemption
e. none of the other choices
99. The SEC allows for a private placement exemption because:
a. registration of “blue chip” securities is not necessary
b. small investors have insufficient information about the background of such offerings, so they need additional
protection
c. small issuers need a break in the costs of the process to be able to compete effectively with large securities’
issuers
d. purchasers of these securities are sophisticated and more able to protect themselves when purchasing
unregistered securities
e. issuers need greater flexibility when dealing with large numbers of small investors
100. The SEC allows for a private placement exemption because:
a. registration of “blue chip” securities is not necessary
b. small investors have insufficient information about the background of such offerings, so they need additional
protection
c. small issuers need a break in the costs of the process to be able to compete effectively with large security
issues
d. issuers need greater flexibility when dealing with large numbers of small investors
e. none of the other choices
101. Under Rule 144A, the SEC permits an exemption from:
a. registration for security issuers selling to institutions worth $100 million or more
b. the 1933 Act for foreign security issuers who sell to U.S. investors
c. the 1934 Act for issuers with annual sales income over $1 billion
d. registration of securities for all U.S. issuers who issue only bonds
e. none of the other choices
102. Some securities are sold under the provisions of Rule 144A. About what fraction of securities offerings have
recently been offered subject to this Rule?
a. one in a hundred
b. one in twenty
c. one in ten
d. one in five
e. one in two
103. U.S. and foreign security issuers are exempt from registration requirements for the sale of bonds and stocks to
institutions with a portfolio of at least $100 million in securities under the provisions of:
a. the Howey Rule
b. Rule 144A of the 1933 Securities Act
c. Rule 14 of the 1933 Securities Act
d. Rule 144A of the 1934 Securities Exchange Act
e. the Qualified Institutional Buyers Rule
104. U.S. and foreign security issuers are exempt from registration requirements for the sale of bonds and stocks to
institutions with a portfolio of at least $100 million in securities under the provisions of:
a. the Howey Rule
b. the Qualified Institutional Buyers Rule
c. Rule 14 of the 1933 Securities Act
d. Rule 144B of the 1934 Securities Exchange Act
e. none of the other choices are correct
105. Accredited investors, under SEC Regulation D for private placements include:
a. banks and insurance companies
b. individuals with accounts with registered stock brokers
c. individuals with annual incomes over $200,000 or a net worth of at least $2.5 million
d. banks and insurance companies and individuals with annual incomes over $200,000 or a net worth of at least
$2.5 million
e. banks and insurance companies and individuals with annual incomes over $200,000 or a net worth of at least
$2.5 million and individuals with accounts with registered stock brokers
106. Accredited investors, under SEC Regulation D for private placements include:
a. banks and insurance companies
b. individuals with accounts with registered stock brokers
c. individuals registered with the SEC
d. banks and insurance companies and individuals registered with the SEC
e. none of the other choices
107. Which of the following would be considered an accredited investor under Regulation D:
a. a bank
b. a private business with fewer than 5 employees
c. an individual investor
d. a foreigner
e. none of the other choices are correct
108. Which of the following would be considered an accredited investor under Regulation D:
a. an insurance company
b. a private business with fewer than 5 employees and annual income of $150,000
c. an individual investor with a $100,000 annual income
d. a foreigner with a $150,000 annual income
e. none of the other choices are correct
109. An investor who is presumed sophisticated and wealthy enough to evaluate investment opportunities without an
SEC-approved prospectus is known as a(n):
a. accredited investor
b. knowledgeable investor
c. reasonable investor
d. real investor
e. legitimate investor
110. An investor who is presumed sophisticated and wealthy enough to evaluate investment opportunities without an
SEC-approved prospectus is known as a:
a. legitimate investor
b. knowledgeable investor
c. reasonable investor
d. real investor
e. none of the other choices are correct
111. To be considered an accredited, investor an individual must have an annual income of at least:
a. $50,000
b. $100,000
c. $150,000
d. $200,000
e. $300,000
112. To be considered accredited investors, a couple must have an annual income of at least:
a. $50,000
b. $100,000
c. $150,000
d. $200,000
e. $300,000
113. To be considered an accredited, investor an individual must have a net worth of at least:
a. $50,000
b. $100,000
c. $1 million
d. $2.5 million
e. $5 million
114. The most common Regulation D offerings for private placements are called:
a. Accredited Investors Offering Registration
b. Small Corporate Offering Registration
c. Large Corporate Offering Registration
d. EDGAR Registrations
e. none of the other choices
115. Under Regulation D and Rule 504, Small Corporate Offering Registrations can be used for stock issues sold
without full registration if the money being raised:
a. is no more than $1 million
b. is no more than $10 million
c. is more than $100 million
d. will come only from corporations with net asset values under $10 million
e. none of the other choices
116. Securities sold in private placements:
a. require no action with the SEC
b. only require the SEC to be notified of the sale, there are no other specific rules
c. require no action with the SEC but require the investors be given a private-placement memorandum
d. require the SEC to be notified and the investors to be given a private-placement memorandum
e. none of the other choices
117. A private-placement memorandum is:
a. a notice to the SEC about a non-registered security sale that is occurring
b. a contract signed by the buyer of an unregistered security in which they recognize they are buying risky,
unregistered securities
c. information to investors in unregistered securities that is similar to a prospectus
d. a note placed in the permanent files of an unregistered security offering detailing the offer
e. none of the other choices
118. A private-placement memorandum is:
a. a notice to the SEC about a non-registered security sale that is occurring
b. a contract signed by the buyer of an unregistered security in which they recognize they are buying risky,
unregistered securities
c. a notification to stock brokers about the availability of an unregistered stock offering
d. a note placed in the permanent files of an unregistered security offering detailing the offer
e. none of the other choices