LGS 200 Exam 4 Questions With Correct
Answers
Business judgement rule - CORRECT ANSWER✔✔-In making a business
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decision, the directors of a corporation acted on an informed basis, in
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good faith and in the honest belief that the action taken was in the best
| | | | | | | | | | | | | | |
interests of the company.
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Entrepreneur - CORRECT ANSWER✔✔-A person who forms and
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operates a new business either by him- or herself or with others.
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Securities Act of 1933 - CORRECT ANSWER✔✔-require full and honest
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disclosure of information to investors.
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SEC (Securities Exchange Commission) - CORRECT ANSWER✔✔--Federal
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administrative agency empowered to administer federal securities laws.
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-Adopts rules and regulations to interpret and implement federal
| | | | | | | | |
securities laws. |
-Investigates alleged securities violations and brings enforcement
| | | | | | |
actions.
-Regulates activities of securities brokers and advisors
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, Sarbanes-Oxley Act - CORRECT ANSWER✔✔-enacted to bring more | | | | | | | |
transparency to securities markets and eliminate conflicts of interest in | | | | | | | | | |
the industry. Sarbanes-Oxley Act erects a wall between investment
| | | | | | | | |
bankers and securities analysts | | |
Short swing profits - CORRECT ANSWER✔✔-Profits made by statutory
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insiders on trades that occur within 6 months of each other.
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Insider trading (Sec. 10(b)(5) - CORRECT ANSWER✔✔--When an insider
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makes a profit by personally purchasing shares of the corporation prior
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to public release of favorable information or sells shares of the
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corporation prior to the disclosure of unfavorable information | | | | | | |
-The use of material nonpublic information to make a profit by trading
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in securities of the company
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U.S. v. Baghat - CORRECT ANSWER✔✔--Facts: Bhagat worked for NVIDIA
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Corp.
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Invidia won the contract to develop the Xbox for Microsoft Corp.The
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CEO sent out a company -wide email announcing the contract and that
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the Xbox information should be kept confidential, and advised Nvidia
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employees to stop trading on the purchase of Nvidia stock. Minutes
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later, Bhagat purchased large quantities of Nvidia, testifying he read the
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emails 40 minutes after his purchase. Less than 30 min. later his friend
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Mamat Gill purchased Nvidia stock. The U.S. brought criminal charges
| | | | | | | | | |
against Bhagat for insider trading. | | | |
Answers
Business judgement rule - CORRECT ANSWER✔✔-In making a business
| | | | | | | | |
decision, the directors of a corporation acted on an informed basis, in
| | | | | | | | | | | |
good faith and in the honest belief that the action taken was in the best
| | | | | | | | | | | | | | |
interests of the company.
| | |
Entrepreneur - CORRECT ANSWER✔✔-A person who forms and
| | | | | | | |
operates a new business either by him- or herself or with others.
| | | | | | | | | | |
Securities Act of 1933 - CORRECT ANSWER✔✔-require full and honest
| | | | | | | | | |
disclosure of information to investors.
| | | |
SEC (Securities Exchange Commission) - CORRECT ANSWER✔✔--Federal
| | | | | | |
administrative agency empowered to administer federal securities laws.
| | | | | | |
-Adopts rules and regulations to interpret and implement federal
| | | | | | | | |
securities laws. |
-Investigates alleged securities violations and brings enforcement
| | | | | | |
actions.
-Regulates activities of securities brokers and advisors
| | | | | |
, Sarbanes-Oxley Act - CORRECT ANSWER✔✔-enacted to bring more | | | | | | | |
transparency to securities markets and eliminate conflicts of interest in | | | | | | | | | |
the industry. Sarbanes-Oxley Act erects a wall between investment
| | | | | | | | |
bankers and securities analysts | | |
Short swing profits - CORRECT ANSWER✔✔-Profits made by statutory
| | | | | | | | |
insiders on trades that occur within 6 months of each other.
| | | | | | | | | |
Insider trading (Sec. 10(b)(5) - CORRECT ANSWER✔✔--When an insider
| | | | | | | | |
makes a profit by personally purchasing shares of the corporation prior
| | | | | | | | | | |
to public release of favorable information or sells shares of the
| | | | | | | | | | |
corporation prior to the disclosure of unfavorable information | | | | | | |
-The use of material nonpublic information to make a profit by trading
| | | | | | | | | | | |
in securities of the company
| | | |
U.S. v. Baghat - CORRECT ANSWER✔✔--Facts: Bhagat worked for NVIDIA
| | | | | | | | |
Corp.
|
Invidia won the contract to develop the Xbox for Microsoft Corp.The
| | | | | | | | | | |
CEO sent out a company -wide email announcing the contract and that
| | | | | | | | | | | |
the Xbox information should be kept confidential, and advised Nvidia
| | | | | | | | | |
employees to stop trading on the purchase of Nvidia stock. Minutes
| | | | | | | | | | |
later, Bhagat purchased large quantities of Nvidia, testifying he read the
| | | | | | | | | | |
emails 40 minutes after his purchase. Less than 30 min. later his friend
| | | | | | | | | | | | |
Mamat Gill purchased Nvidia stock. The U.S. brought criminal charges
| | | | | | | | | |
against Bhagat for insider trading. | | | |
