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Exam 19: Investor Protection and Corporate Governance

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Question 31

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Market Data Corporation is required to file a registration statement with the Securities and Exchange Commission.This statement must contain

A) a copy of prospectuses to be provided to investors.
B) a description of securities being offered for sale.
C) a record of pre-registration sales in securities.
D) a statement that securities being offered for sale are worth the price.

E) A) and B)
F) B) and D)

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Question 32

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Luan,a programmer for Monetized Nation Inc. ,a business modeling service,learns of undisclosed company plans to distribute a new app.Luan reveals the company plans to a friend,Ono,who buys 5,000 shares of the firm's stock.Under the Securities Exchange Act of 1934,Ono is most likely

A) liable for insider trading.
B) not liable because Ono did not prevent others from profiting.
C) not liable because Ono did not solicit information from Luan.
D) not liable because Ono does not work for the firm.

E) None of the above
F) B) and D)

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Question 33

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Ross,a sales executive with Steel Mill Inc. ,learns of undisclosed company plans to produce a new type of steel.Ross tells Tim,who tells Uri,who buys 100 shares of Steel stock.Uri knows that Tim got the information from Ross.When the firm publicly announces its new product,Uri sells the stock for a profit.Under the Securities Exchange Act of 1934,Uri is most likely

Debt Equity Inc. ,and its officers,directors,and employees,buy and sell securities based on financial research and analysis.Section 16(b) of the Securities Exchange Act of 1934 covers purchases and sales of securities involving

The Sarbanes-Oxley Act of 2002 attempts to increase corporate accountability by imposing strict disclosure requirements and harsh penalties for securities laws.

Issuers of securities offerings must comply with either federal or state securities laws,but not both.

Fresh Fruit Company has assets of less than $10 million and fewer than fifty shareholders.Gourmand Pastries Inc.has assets of more than $50 million and more than five hundred shareholders.The Securities Exchange Act of 1934 applies to

Home Meals Corporation is poised to issue securities that,under the Securities Act of 1933,are exempt.This means that the securities can be sold

An investment contract in a franchise does not qualify as a security.

Providing investors with more information helps them make buying and selling decisions about securities.

To avoid a conviction in a criminal prosecution under the securities laws,there must be at least a reasonable doubt that the defendant knew he or she was acting wrongfully.

Meat Packers Inc.offers its securities for sale only in a single state.The law in this state is like the law in most states.Thus,the company's offer is subject to the state's securities statutes,which are likely to include

Most private,small-business,noninvestment company offers of securities are exempt from the registration requirements.

Pharma Corporation is a public company whose shares are traded in the public securities markets.With respect to financial and other significant information concerning its securities,the Securities Act of 1933

The goal of securities regulation is to

An insider must actually use inside information in connection with the purchase and sale of securities to violate Section 16(b)of the Securities Exchange Act of 1934.

Corporate Financial Inc. ,and its officers,directors,employees,and shareholders,buy and sell securities on behalf of themselves and their clients.SEC Rule 10b-5 applies to the purchase or sale of

While the Securities and Exchange Commission reviews a registration statement for completeness,the securities can be offered for sale but not sold.

To raise $120 million to expand operations,Primo Inc.makes a stock offering directly to sixty accredited investors and twenty sophisticated,but unaccredited investors.The firm plans to notify the SEC of sales.Under the Securities Act of 1933,this issue may qualify as an exempt transaction

Components Assembly Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration.This means that the company must