LES 305 Final Exam questions with
verified answers A+ rated
Chapter 20 flash cards are not on here - correct answer ✔✔
Asset Acquisition - correct answer ✔✔Form of takeover in which another firm buys all the assets of a
firm and gains control through control of the firm's property. If structured property, the acquirer avoid
liability for the debts of the acquired business.
Blue-Sky Law - correct answer ✔✔State law regulating sale of securities.
Comment/Deficiency Letter - correct answer ✔✔SEC response to registration filing; requires additional
information or clarification on proposed offering.
Consolidation - correct answer ✔✔A form of merger in which two firms unite and become known by a
new name.
Due Diligence - correct answer ✔✔Under the Securities Act of 1933, a defense for filing a false
registration statement that requires proof that the individuals involved did all they could to uncover the
truth and could not have discovered the false statements despite a thorough review of all relevant
information.
Exemption - correct answer ✔✔Securities and transactions that do not have to be registered with the
SEC under the Securities Act of 1933.
Foreign Corrupt Practices Act (FCPA) - correct answer ✔✔Federal law prohibiting bribes in foreign
countries and requiring the maintenance of internal controls on accounting for firms registered under
the Securities Exchange Act of 1934.
Howey Test - correct answer ✔✔Created by theU.S. Supreme Court; it defines a security as an
investment in a common enterprise that earns profits from the efforts of others
, Hostile Takeover - correct answer ✔✔A takeover not favored by the target's management.
Insider Trading and Securities Fraud Enforcement Act of 1988 - correct answer ✔✔Act increasing the
Securities Exchange Act of 1934 penalties for insider trading.
Insider - correct answer ✔✔A corporate officer or director or other executive with access to corporate
information that is not available to the public.
Material Misstatement - correct answer ✔✔A statement of fact that would influence an individual's
decision to buy or sell.
Merger - correct answer ✔✔Process of combining firms so that one firm becomes a part of the other
and only one firm's name is retained
Merit Review - correct answer ✔✔Process at the state level of reviewing securities registrations to
determine whether they are good investments.
Prospectus - correct answer ✔✔A document describing the nature of securities and the company
offering them.
Proxy Solicitations - correct answer ✔✔The process of seeking voting rights from shareholders
Red-Herring Prospectus - correct 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) - correct answer ✔✔A filing with the SEC disclosing all the necessary
information about a securities offering under the 1933 Securities Act;
Rule 10b-5 - correct answer ✔✔SEC rule prohibiting fraud in relation to the sale of securities.
Section 10(b) - correct answer ✔✔Antifraud provision of the Securities Exchange Act of 1934.
verified answers A+ rated
Chapter 20 flash cards are not on here - correct answer ✔✔
Asset Acquisition - correct answer ✔✔Form of takeover in which another firm buys all the assets of a
firm and gains control through control of the firm's property. If structured property, the acquirer avoid
liability for the debts of the acquired business.
Blue-Sky Law - correct answer ✔✔State law regulating sale of securities.
Comment/Deficiency Letter - correct answer ✔✔SEC response to registration filing; requires additional
information or clarification on proposed offering.
Consolidation - correct answer ✔✔A form of merger in which two firms unite and become known by a
new name.
Due Diligence - correct answer ✔✔Under the Securities Act of 1933, a defense for filing a false
registration statement that requires proof that the individuals involved did all they could to uncover the
truth and could not have discovered the false statements despite a thorough review of all relevant
information.
Exemption - correct answer ✔✔Securities and transactions that do not have to be registered with the
SEC under the Securities Act of 1933.
Foreign Corrupt Practices Act (FCPA) - correct answer ✔✔Federal law prohibiting bribes in foreign
countries and requiring the maintenance of internal controls on accounting for firms registered under
the Securities Exchange Act of 1934.
Howey Test - correct answer ✔✔Created by theU.S. Supreme Court; it defines a security as an
investment in a common enterprise that earns profits from the efforts of others
, Hostile Takeover - correct answer ✔✔A takeover not favored by the target's management.
Insider Trading and Securities Fraud Enforcement Act of 1988 - correct answer ✔✔Act increasing the
Securities Exchange Act of 1934 penalties for insider trading.
Insider - correct answer ✔✔A corporate officer or director or other executive with access to corporate
information that is not available to the public.
Material Misstatement - correct answer ✔✔A statement of fact that would influence an individual's
decision to buy or sell.
Merger - correct answer ✔✔Process of combining firms so that one firm becomes a part of the other
and only one firm's name is retained
Merit Review - correct answer ✔✔Process at the state level of reviewing securities registrations to
determine whether they are good investments.
Prospectus - correct answer ✔✔A document describing the nature of securities and the company
offering them.
Proxy Solicitations - correct answer ✔✔The process of seeking voting rights from shareholders
Red-Herring Prospectus - correct 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) - correct answer ✔✔A filing with the SEC disclosing all the necessary
information about a securities offering under the 1933 Securities Act;
Rule 10b-5 - correct answer ✔✔SEC rule prohibiting fraud in relation to the sale of securities.
Section 10(b) - correct answer ✔✔Antifraud provision of the Securities Exchange Act of 1934.
