Final Exam LES 305 Securities Questions
And Answers 100% Correct
The Securities Act of 1933 regulates sales of securities by businesses to investors. [Note:
See the third paragraph on page 278 that explains the reach of the 1933 Securities Act.]
The Howey test defines a security as a "contract, transaction, or scheme whereby a person
invests his money in a common enterprise and is led to expect profits solely from the efforts of a
promoter or third party," and was established by the United States Supreme Court. [Note: See
page 728.]
Securities include notes, stocks, bonds, every investment contract that gives notice of an
indebtedness or participation in a business for profit. [Note: Regardless of what you call it, if
something meets the Howey test, it is a security. See page 728.]
All sellers of securities must complete certain filing requirements before the securities may be
sold unless an exemption applies. True. See page 729.
An issuer of securities meets which of the following qualifications for the intrastate offering
exemption The investors must all be residents of the same state, and the issuer has 80% of
, Final Exam LES 305 Securities Questions
And Answers 100% Correct
its assets in the state; 80% of operating income is from the state; and 80% of the proceeds of the
sale are used on operations within the state. [Note: This is called the "triple 80" test. See page
730.]
Accredited investors include A director, executive officer or general partner of the issuer,
a person who purchases at least $150,000 of the securities being offered, natural persons with a
net worth over $1 million, or a natural person with an individual income over $200,000 within
the last 2 years or $300,000 per couple. [Note: Other investors are unaccredited and subject to
limitations for certain types of registration exemptions. See page 731-732. Also note that the
value of the investor's primary residence is not included in the net worth calculation.]
The SEC reviews filings and if the security is a good investment, it may be issued. False.
The SEC only looks at whether the proper information has been disclosed, not whether the
security will be a good investment. See page 733.
The SEC must take action within this time period or the registration will be deemed to be
accepted 20 days. [Note: See page 733.]
And Answers 100% Correct
The Securities Act of 1933 regulates sales of securities by businesses to investors. [Note:
See the third paragraph on page 278 that explains the reach of the 1933 Securities Act.]
The Howey test defines a security as a "contract, transaction, or scheme whereby a person
invests his money in a common enterprise and is led to expect profits solely from the efforts of a
promoter or third party," and was established by the United States Supreme Court. [Note: See
page 728.]
Securities include notes, stocks, bonds, every investment contract that gives notice of an
indebtedness or participation in a business for profit. [Note: Regardless of what you call it, if
something meets the Howey test, it is a security. See page 728.]
All sellers of securities must complete certain filing requirements before the securities may be
sold unless an exemption applies. True. See page 729.
An issuer of securities meets which of the following qualifications for the intrastate offering
exemption The investors must all be residents of the same state, and the issuer has 80% of
, Final Exam LES 305 Securities Questions
And Answers 100% Correct
its assets in the state; 80% of operating income is from the state; and 80% of the proceeds of the
sale are used on operations within the state. [Note: This is called the "triple 80" test. See page
730.]
Accredited investors include A director, executive officer or general partner of the issuer,
a person who purchases at least $150,000 of the securities being offered, natural persons with a
net worth over $1 million, or a natural person with an individual income over $200,000 within
the last 2 years or $300,000 per couple. [Note: Other investors are unaccredited and subject to
limitations for certain types of registration exemptions. See page 731-732. Also note that the
value of the investor's primary residence is not included in the net worth calculation.]
The SEC reviews filings and if the security is a good investment, it may be issued. False.
The SEC only looks at whether the proper information has been disclosed, not whether the
security will be a good investment. See page 733.
The SEC must take action within this time period or the registration will be deemed to be
accepted 20 days. [Note: See page 733.]
