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Exam 28: Investor Protection and Corporate Governance

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Question 1

True/False

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

A) True
B) False

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verified

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Question 2

True/False

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Corporate "outsiders" may be held liable for insider trading under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.

A) True
B) False

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Question 3

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Industrial Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, Industrial is required to

Grain Mills Corporation is required to register its securities under Section 12 of the Securities Exchange Act of 1934. Section 14(a) of the act regulates

Mars Mission Inc. is a regulated publicly held corporation. Under the Securities Act of 1934, Mars is required to

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

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 Mill 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

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.

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

While the Securities and Exchange Commission reviews a registration statement for completeness, most issuers can distribute a free-writing prospectus.

Anyone who has access to or receives inside information of a nonpublic nature and trades on it for personal gain can be liable under SEC Rule 10b-5.

Equity Corporation, and its officers, directors, employees, and shareholders, buy and sell securities. Section 10(b) of the Securities Exchange Act of 1934 applies to the trading of securities

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

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

The Securities Exchange Act of 1934 applies to all cases involving the trading of securities, except in private transactions.

The Securities Exchange Act of 1934 provides for continuous periodic disclosures by certain publicly held companies.

Ewan, the chief executive officer of Furniture Inc., intentionally understates the amount of the firm's debts in information provided to investors as part of an issue of stock. Gary buys the stock and suffers a loss. Ewan may be subject to

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

The definition of security in the Securities Act of 1933 includes interests that involve the right to buy a security on a national security exchange.

Securities must be registered under the Securities Act of 1933 for the Securities Exchange Act of 1934 to apply.