LENB 3135 Chapter 19 Study Questions with Correct Answers

LENB 3135 Chapter 19 Study Questions with Correct Answers The Securities Act of 1933 was designed to: a. require disclosure of all relevant information concerning the issuance of securities to the public b. regulate the operations of national stock exchanges c. oversee and regulate national security contracts d. promote the use of proxies by shareholders - ANSWER-a. require disclosure of all relevant information concerning the issuance of securities to the public The Howey test is a test: a. invented by Martha Howey b. involving the definitions of an investment contract c. outlining exemptions from securities laws Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 2/15 d. that is no longer used today - ANSWER-b. involving the definitions of an investment contract A typical registration statement filed with the SEC includes: (select all that apply) a. The corporation's properties and businesses b. How the corporation intends to use the proceeds of the sale c. Any pending lawsuits or special risk factors d. The securities offered for sale e. Any past settlement offers f. The management of the corporation, including managerial compensation and benefits g. The past financial records of the corporation - ANSWER-a. The corporation's properties and businesses b. How the corporation intends to use the proceeds of the sale c. Any pending lawsuits or special risk factors d. The securities offered for sale Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 3/15 f. The management of the corporation, Examples of exempt securities under the Securities Act of 1933 are a. bonds issued by the American Red Cross b. shares of Apple c. bonds issued by Google d. investment contracts in condominiums - ANSWER-a. bonds issued by the American Red Cross The Rule 504 exemption is used by most small businesses and provides that noninvestment offerings up to [$500,000, $750,000, $2,000,000, $5,000,000] in any twelve-month period are exempt. - ANSWER- $5,000,000 True/False: The 1934 Securities Exchange Act provides for the regulation and registration of securities exchanges, brokers, dealers, and national securities associations, such as the National Association of Securities Dealers (NASD) - ANSWER-True c. The 1933 act is a one-time disclosure law, whereas the 1934 act provides for continuous periodic disclosures by publicly held corporations - Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 4/15 ANSWER-c. The 1933 act is a one-time disclosure law, whereas the 1934 act provides for continuous periodic disclosures by publicly held corporations The Securities Exchange Act applies to companies that have assets in excess of and [$1 million, $5 million, $10 million, $20 million] five hundred or more shareholders. - ANSWER-$10 million True/False: SEC Rule 10b-5 applies only to cases that involve the trading of securities on organized exchanges, such as the New York Stock Exchange - ANSWER-False Insider trading involves individuals who are: a. inside prison at the time the allegedly illegal trade o