CEP Level 1 questions with verified answers
Rule 10b-5 Ans✓✓✓-The Exchange Act rule that prohibits trading in securities by
a person having "material non-public" information is:
Regulation T Ans✓✓✓-Which is the statute that sets forth provisions
promulgated by the Board of Governors of the Federal Reserve System to
regulate the extension of credit by brokers and dealers in connection with the
purchase or carrying of securities?
Federal Reserve Ans✓✓✓-Which agency is responsible for the provision to
regulate the extension of credit by brokers and dealers in connection with the
purchase or carrying of securities?
The purchases are not required to be reported, but the insider's holdings should
be updated to reflect the purchases on the next form filed by the insider
Ans✓✓✓-How and when do an insider's purchases under a qualified Section 423
ESPP need to be reported to the SEC?
She must report both the exercise and the sale of the shares she used to effect
the swap on a Form 4 Ans✓✓✓-A public company's equity plan authorizes the
delivery of previously-owned shares of stock as a payment method for option
exercises. A director of the company takes advantage of this payment method by
tendering 200 shares to exercise 500 options. What is her reporting responsibility
in connection with the award?
Only by the beneficial owner Ans✓✓✓-Shares held in a brokerage account can be
voted
, Within 2 business days on Form 4 Ans✓✓✓-When is the grant of an equity award
required to be reported for Section 16 officers, and on which form?
Same-day sales, sell-to-cover and promissory note Ans✓✓✓-Broker -assisted
cashless exercises can take what kind of forms:
All directors and certain key executive officers Ans✓✓✓-Which of the following
individuals would be considered an affiliate of the issuer?
$1 million, 15% of the total assets of the issuer, 15% of the outstanding amount of
the class securities being offered and sold in reliance on Rule 701 Ans✓✓✓-
During any 12-month period the aggregate sales price or amount of securities
sold in reliance on Rule 701 cannot exceed the greatest of:
lists matchable transactions under Section 16(b), includes exemptions to
reporting under Section 16(a), also is designed to facilitate the receipt of stock-
based compensation by reporting persons without incurring liability under Section
16(b) Ans✓✓✓-Rule 16b-3
shares are typically registered electronically in the name of the broker, and held
by the broker in "street name" on behalf of the new stockholder for ease of
future trading. Ans✓✓✓-In a sell-to-cover broker's transaction:
The expiration or cancellation of a stock option Ans✓✓✓-Which is NOT required
to be reported by a public company insider on Form 4?
300. Because the stock is actually issued for restricted stock awards at the time of
grant, all shares are eligible for voting even before they vest. Restricted stock
units are not settled in issued stock until the units vest, so no voting rights attach
Rule 10b-5 Ans✓✓✓-The Exchange Act rule that prohibits trading in securities by
a person having "material non-public" information is:
Regulation T Ans✓✓✓-Which is the statute that sets forth provisions
promulgated by the Board of Governors of the Federal Reserve System to
regulate the extension of credit by brokers and dealers in connection with the
purchase or carrying of securities?
Federal Reserve Ans✓✓✓-Which agency is responsible for the provision to
regulate the extension of credit by brokers and dealers in connection with the
purchase or carrying of securities?
The purchases are not required to be reported, but the insider's holdings should
be updated to reflect the purchases on the next form filed by the insider
Ans✓✓✓-How and when do an insider's purchases under a qualified Section 423
ESPP need to be reported to the SEC?
She must report both the exercise and the sale of the shares she used to effect
the swap on a Form 4 Ans✓✓✓-A public company's equity plan authorizes the
delivery of previously-owned shares of stock as a payment method for option
exercises. A director of the company takes advantage of this payment method by
tendering 200 shares to exercise 500 options. What is her reporting responsibility
in connection with the award?
Only by the beneficial owner Ans✓✓✓-Shares held in a brokerage account can be
voted
, Within 2 business days on Form 4 Ans✓✓✓-When is the grant of an equity award
required to be reported for Section 16 officers, and on which form?
Same-day sales, sell-to-cover and promissory note Ans✓✓✓-Broker -assisted
cashless exercises can take what kind of forms:
All directors and certain key executive officers Ans✓✓✓-Which of the following
individuals would be considered an affiliate of the issuer?
$1 million, 15% of the total assets of the issuer, 15% of the outstanding amount of
the class securities being offered and sold in reliance on Rule 701 Ans✓✓✓-
During any 12-month period the aggregate sales price or amount of securities
sold in reliance on Rule 701 cannot exceed the greatest of:
lists matchable transactions under Section 16(b), includes exemptions to
reporting under Section 16(a), also is designed to facilitate the receipt of stock-
based compensation by reporting persons without incurring liability under Section
16(b) Ans✓✓✓-Rule 16b-3
shares are typically registered electronically in the name of the broker, and held
by the broker in "street name" on behalf of the new stockholder for ease of
future trading. Ans✓✓✓-In a sell-to-cover broker's transaction:
The expiration or cancellation of a stock option Ans✓✓✓-Which is NOT required
to be reported by a public company insider on Form 4?
300. Because the stock is actually issued for restricted stock awards at the time of
grant, all shares are eligible for voting even before they vest. Restricted stock
units are not settled in issued stock until the units vest, so no voting rights attach
