LES 305 FINAL EXAM QUESTIONS AND
ANSWERS
Proxy Solicitations - Answer-The process of seeking voting rights from shareholders
Red-Herring Prospectus - Answer-A prospectus issued before the effective date of a
securities registration statement; permissible to release these before the registration
statement is effective so long as a disclaimer that it is not an offer to sell securities is
noted in red on the prospectus.
Registration Statement (S-1) - Answer-A filing with the SEC disclosing all the necessary
information about a securities offering under the 1933 Securities Act;
Rule 10b-5 - Answer-SEC rule prohibiting fraud in relation to the sale of securities.
Section 10(b) - Answer-Antifraud provision of the Securities Exchange Act of 1934.
Section 16 - Answer-Section of the Securities Exchange Act of 1934 that regulates
sales and purchases of shares by directors, officers, and 10 percent of shareholders.
Securities Act of 1933 - Answer-The federal law governing the initial issuance and sale
of securities to the public.
Securities and Exchange Commission (SEC) - Answer-Federal agency responsible for
enforcement of federal securities law.
Securities Exchange Act of 1934 - Answer-The federal law governing the secondary
sales of securities, the markets, and the firms dealing with securities.
Securities - Answer-Investment of money in a common enterprise with profits earned
largely from the efforts of others.
Short-Swing Profits - Answer-Profits made by corporate insiders during a period of less
than six months between purchase and sale
Takeover - Answer-A takeover of one firm by another firm when the target firm solicits
or agrees to the takeover.
Tender Offer - Answer-Offer to more than 10 percent of the shareholders of a firm for
the purchase of their shares; generally part of a takeover effort.
Tippee - Answer-Party who receives inside information about a corporation or its
securities and uses the information to trade securities.
ANSWERS
Proxy Solicitations - Answer-The process of seeking voting rights from shareholders
Red-Herring Prospectus - Answer-A prospectus issued before the effective date of a
securities registration statement; permissible to release these before the registration
statement is effective so long as a disclaimer that it is not an offer to sell securities is
noted in red on the prospectus.
Registration Statement (S-1) - Answer-A filing with the SEC disclosing all the necessary
information about a securities offering under the 1933 Securities Act;
Rule 10b-5 - Answer-SEC rule prohibiting fraud in relation to the sale of securities.
Section 10(b) - Answer-Antifraud provision of the Securities Exchange Act of 1934.
Section 16 - Answer-Section of the Securities Exchange Act of 1934 that regulates
sales and purchases of shares by directors, officers, and 10 percent of shareholders.
Securities Act of 1933 - Answer-The federal law governing the initial issuance and sale
of securities to the public.
Securities and Exchange Commission (SEC) - Answer-Federal agency responsible for
enforcement of federal securities law.
Securities Exchange Act of 1934 - Answer-The federal law governing the secondary
sales of securities, the markets, and the firms dealing with securities.
Securities - Answer-Investment of money in a common enterprise with profits earned
largely from the efforts of others.
Short-Swing Profits - Answer-Profits made by corporate insiders during a period of less
than six months between purchase and sale
Takeover - Answer-A takeover of one firm by another firm when the target firm solicits
or agrees to the takeover.
Tender Offer - Answer-Offer to more than 10 percent of the shareholders of a firm for
the purchase of their shares; generally part of a takeover effort.
Tippee - Answer-Party who receives inside information about a corporation or its
securities and uses the information to trade securities.
