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Questions
Q:
Mona and Nero want to discharge their contract by executing and perÂforming a new agreement. They can best accomplish this by
a. accord and satisfaction.
b. novation.
c. reinvention.
d. specific performance.
Q:
The issuance of securities by an issuer to the public is known as a(n) ________.
Q:
What would make the demand for labor more elastic?
Q:
Roy and Sheila are parties to a contract. They subseÂquently agree that Tony should take Roy's place and assume all of his rights and duties under the contract. This is
a. a novation.
b. an accord and satisfaction.
c. an assignment.
d. a modification.
Q:
Crowd funding offerings are subject to the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
Q:
Super Toolmakers, Inc., contracts to sell its business to True Hardware CorpoÂration. Before either party has performed, rescission of this conÂtract requires
a. a mutual agreement to rescind.
b. consideration.
c. performance by all of the parties.
d. an accord and satisfaction.
Q:
An issuer who plans on raising $1 million or less from the public must answer the questions on Form U-7, which doubles as a prospectus and must be made available to prospective investors.
Q:
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1. One month before the term begins, Bell is underbid by a competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.
Bell's repudiation is most likely
a. a material breach.
b. a minor breach.
c. Chris's breach.
d. no breach.
Q:
There are no resale restrictions on securities that come under Regulation A.
Q:
The Sherman Antitrust Act was enforced in 1906 by a ruling of the Supreme Court regarding the monopolization of the oil industry byA) Getty Oil of Oklahoma. B) Texaco Oil of Texas.C) Gulf Oil of Pennsylvania. D) Standard Oil of New Jersey.
Q:
Bell Medical Education Service enters into a contract to employ Chris as an instructor for two years to begin May 1. One month before the term begins, Bell is underbid by a competitor and loses a major client, Delta Hospital Center. Bell now refuses to hire Chris.
. Under the circumstances, with respect to damages, Chris can
a. bring an action immediately.
b. bring an action only after the contract's two-year term begins.
c. bring an action only after the contract's two-year term ends.
d. do nothing.
Q:
An offering circular must be provided to the investors immediately after the purchase of a Regulation A offering.
Q:
Building Restoration, Inc. (BRI), enters into a contract to refurbish an old train depot for Casual Dining, Inc., to open as Eat Up Restaurant. If BRI completes most of the work promised in the contract, its performance will be
a. absolute.
b. complete.
c. material.
d. substantial.
Q:
Safe-T Guard Services enters into a contract to secure Taylor's Business Park from vandalism and theft between 6 p.m. and 6 a.m. nightly for six months. At the end of the term, if there has been no vandalism or theft in the Park, Safe-T's performance will have been
a. absolute.
b. complete.
c. conditional.
d. substantial.
Q:
An offering statement requires less disclosure compared to a registration statement.
Q:
Xavier enters into a contract to operate a Yummy Yogurt franchise, which Yummy agrees to support as long as Xavier maintains his business license. Yummy's duty to perform is
a. absolute.
b. conditional.
c. licentious.
d. operational.
Q:
Regulation A offerings can be sold without registration with the SEC provided that an offering statement is provided prior to the purchase of the securities.
Q:
According to Regulation A, securities of up to $50 million can only be sold to accredited investors.
Q:
The Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged inA) the regulation of natural monopolies.B) the regulation of nonmonopolistic industries. C) social regulation.D) health and safety regulation.
Q:
Lon enters into a contract to mine limestone in Mica's quarry, sell it, and share the profits on its sale with Mica. If the duties under this contract are discharged like those under most contracts, the duties will be
a. assigned.
b. breached.
c. performed.
d. rescinded.
Q:
An investor who has purchased an unregistered security can rescind their purchase, but not recover damages.
Q:
Ron makes a contract with Stu that indirectly benefits Tim, although neiÂther Ron nor Stu intended that result. Tim is
a. a delegatee.
b. an assignee.
c. an incidental beneficiary.
d. an intended beneficiary.
Q:
A prospectus is a written disclosure provided with the registration statement that helps the SEC to evaluate the financial risk of an investment.
Q:
Nick and Roberta contract for the sale of computer equipment, reserving the right to alÂter a particular provision in the contract. The rights of any third party beneficiary of that contract are
a. not affected by the reservation.
b. limited to the extent of the reservation.
c. limited only if the beneficiary agrees to the reservation.
d. none of the choices.
Q:
During the review of a registration statement, the SEC does not pass judgment on the merits of the securities offered.
Q:
Jen is a third party beneficiary under a contract between Kyla and Leo. Kyla and Leo can modify or rescind their contract without Jen's consent
a. at any time.
b. at no time.
c. only after Jen's rights have vested.
d. only before Jen's rights have vested.
Q:
A registration statement need not contain details on how the proceeds from the offering will be used.
Q:
FirmAnnual SalesFirmAnnual SalesA$1000G$800B800H1500C220I1050D75J90E50K75F40L300Refer to the above table. The eight-firm concentration ratio isA) 100 percent. B) 96 percent. C) 94.5 percent. D) 87.2 percent.
Q:
Esther and Faisal agree that Esther will fix Faisal's car in exchange for his paying a preexisting debt owed by Esther to Gladys. Gladys is
a. an assignee.
b. an intended beneficiary.
c. an incidental beneficiary.
d. a delegatee.
Q:
Only an established company is permitted to sell new securities to the public.
Q:
Vicky contracts with Warren for the delivery of hospice services to benefit Xavier. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. a novation.
Q:
The sale of securities by an issuer to the public is known as an initial public offering.
Q:
Joy and Kris enter into a contract for Kris to lay sod in Joy's yard for which she agrees to pay Kris. When Kris's schedule conflicts, she contacts Leza, to whom Kris "assigns all rights under the contract." Kris is
a. absolved of any liability under the contract.
b. in breach of the contract with Joy.
c. liable to Joy if Leza does not perform.
d. liable to Leza for inducing a prohibited contract.
Q:
Section 5 of the Securities Act of 1933 requires an issuer to register its securities with the SEC prior to selling them to the public.
Q:
In the short run, the monopolistic competitor is just like the perfect competitor in that
A) equilibrium is determined by setting price equal to marginal cost.
B) either type of firm can earn economic profits, experience economic losses, or break even in the short run.
C) each equates marginal revenue and marginal cost in order to maximize profits, with the result that price exceeds marginal revenue.
D) new firms enter in the short run when firms are making profits.
Q:
Frank and AgriShip, Inc., enter into a contract for AgriShip to transport a silo of soybeans for which Frank agrees to pay. When AgriShip's schedule conflicts, the firm contacts Hybrid Transport Company, to which AgriShip "assigns all rights under the contract." This transfer is
a. an assignment and a delegation.
b. an assignment only.
c. a delegation only.
d. neither an assignment nor a delegation.
Q:
The electronic data and record system of the Securities and Exchange Commission (SEC) is known as ________.
A) EDGAR
B) NASDAQ
C) MICEX
D) SPSE
Q:
Equity Company and Faye enter into a contract for Faye to cater a meeting of Equity's shareholders. When Faye's schedule conflicts, she asks Gudren to serve Faye's coffee and pastries at the meeting. This transfer of duties is
a. a delegation.
b. an assignment.
c. a novation.
d. prohibited by law.
Q:
Which of the following has the largest trading volume of any securities exchange in the world?
A) the NYSE
B) Euronext
C) NASDAQ
D) the London Stock Exchange
Q:
Commercial Shipping, Inc., and Dock Services Corporation enter into a contract for Dock to load Commercial's trucks for which Commercial agrees to pay Dock. Dock transfers its duty to load the trucks to East Harbor Transport Company. Dock is
a. a delegator.
b. an assignor.
c. a payor.
d. an assignee.
Q:
Which of the following is true of the Small Company Offering Registration (SCOR) form?
A) A SCOR form can only be used for raising more than $1 million through the sale of securities.
B) A SCOR form can be used by both domestic and foreign companies.
C) A SCOR form doubles as a prospectus for potential investors.
D) A SCOR form must be completed by the issuee before purchasing securities.
Q:
Rural Development Corporation (RDC) and Sid enter into a contract for the clear-cutting of RDC's fifty-acre tract for which RDC agrees to pay Sid. Sid transfers his duty to log the tract under the contract to Timber Logging Company. Timber is
a. a delegatee.
b. an assignee.
c. an obligee.
d. a donee.
Q:
A small business can file a ________ with the Securities and Exchange Commission (SEC) if it plans on raising $1 million or less in any 12-month period from a public offering of securities.
A) Form U-7
B) registration statement
C) Form S-1
D) certificate of interest
Q:
Trudy and Uri enter into a contract for the sale of Trudy's house for which Uri agrees to pay her $250,000. Uri wants to transfer his right to the ownership of the house to Val, his niece. This transfer generally
a. cannot be prohibited.
b. cannot be allowed.
c. can be prevented.
d. can be circumvented.
Q:
Which of the following is true of a Regulation A offering?
A) It imposes resale restrictions on the securities it offers.
B) It requires issuers to prepare a registration statement for offers exceeding $100,000.
C) It requires more disclosure than a registration statement and is more costly to prepare.
D) It mandates that an offering circular be provided to investors prior to their purchase of securities.
Q:
According to the above figure, the maximum profit the monopolist can receive isA) 0. B) $1,500 per day. C) $9,000 per day. D) $7,500 per day.
Q:
Ben and Ivy enter into a contract under which Ben agrees to cater Ivy's wedding in exchange for a cash down payment. The contract expressly prohibits any transfer of rights. A contract right may be transferred, however, if the transfer involves
a. a right to receive payment.
b. a right to Ben's services.
c. rights under Ivy's insurance policy against Ben's failing to perform.
d. a right whose transfer is otherwise expressly prohibited by statute.
Q:
________ permits issuers to sell up to $50 million of securities to the public during a 12-month period, pursuant to a simplified registration process.
A) SEC Rule 506
B) Section 12 of the Securities Act of 1933
C) Section 5 of the Securities Act of 1934
D) Regulation A
Q:
Musica Production Company and Nora enter into a contract for Nora to write six songs for which Musica agrees to pay her. Nora transfers her right to payment under the contract to Omni Entertainment Agency. Nora is
a. a delegator.
b. an assignor.
c. a payor.
d. an assignee.
Q:
Scissorwire Inc. sells shares of its stock to the public, with each share valued at $16. After a year, the company incurs a loss and the price of the stock drops to $5 per share. The company reveals that it had deliberately not registered with the SEC before going public and that it has no money to pay the investors. Which of the following is true in this situation?
A) Scissorwire Inc. can register with the SEC at any point after the decline in share price.
B) The U.S. government can file a criminal lawsuit against Scissorwire Inc. to seek criminal penalties.
C) The investors were negligent in failing to verify registration prior to stock purchase, and therefore cannot rescind their purchase.
D) Scissorwire Inc. is liable for violation of the Securities Exchange Act of 1934.
Q:
Dwayne and Ewell enter into a contract for the design of an addition to Dwayne's house for which he agrees to pay Ewell. Ewell transfers his right to payment under the contract to Flex Construction Company. Flex is
a. a delegatee.
b. an assignee.
c. an obligee.
d. a donee.
Q:
A(n) ________ is submitted along with the registration statement to the Securities and Exchange Commission (SEC), and is also used as a selling tool to help prospective investors evaluate the financial risk of an investment.
A) organization document
B) certificate of interest
C) prospectus
D) operation agreement
Q:
Clem attempts to free himself from the duties of his contract with Drew by telling Drew to find someone else to perform them. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. none of the choices.
Q:
Which of the following is true of a registration statement?
A) A registration statement must be accompanied by financial statements certified by certified public accountants.
B) Once submitted, a registration statement cannot be amended.
C) The SEC judges the merits of the securities based on the registration statement.
D) A registration statement need not reveal how a company plans on using the proceeds from the offering.
Q:
A situation in which the price charged is less than societyʹs opportunity cost would lead toA) too little being produced. B) too much being produced. C) an efficient amount being produced. D) marginal cost pricing.
Q:
McCall and Teresa enter into a contract for the distribution of McCall's produce to local restaurants for which Teresa agrees to pay. McCall transfers his right to payment under the contract to Midtown Bank. This transfer is
a. a delegation.
b. an assignment.
c. a novation.
d. prohibited by law.
Q:
Utilities Inc. decided to go public by an initial public offering. It sold securities, some of which were bought by James Jefferson. Six months later, Mr. Jefferson sold the Utilities shares he had purchased to Martha Graham and Mark Franco. Two years later, Mr. Jefferson bought back the Utilities shares from Ms. Graham and Mr. Franco and made a profit out of both transactions. Identify the issuer in this scenario.
A) Utilities Inc.
B) James Jefferson
C) Martha Graham
D) Mark Franco
Q:
A contract will be discharged if foreseeable circumstances make it impossible to attain the contract's purpose.
Q:
Which of the following must be included in the registration statement?
A) judgments passed by the SEC on the merits of the securities offered
B) how proceeds from the offering will be used
C) the date of termination of the initial public offering
D) the maximum number of times a share can be sold post-issue
Q:
A(n) ________ refers to a document that an issuer of securities files with the Securities and Exchange Commission (SEC) that contains required information about the issuer, the securities to be issued, and other relevant information.
A) article of organization
B) operating statement
C) registration statement
D) certificate of interest
Q:
After a contract is made, a supervening event may make performance impossible and discharge the contract.
Q:
Performance of an accord discharges an original contractual obligation.
Q:
Which of the following best defines an initial public offering (IPO)?
A) the issuance of an offering statement to the public prior to purchase
B) the filing of a registration statement by an issuer
C) the disclosure document released for public scrutiny
D) the issuance of securities by an issuer to the public
Q:
Why should a perfect competitor produce at which price equals marginal cost?
Q:
When a contract party alters a written contract, the other party must adapt his or her performance accordingly.
Q:
________ requires securities offered to the public through the use of the mails or any facility of interstate commerce to be registered with the Securities and Exchange Commission (SEC) by means of a registration statement and an accompanying prospectus.
A) Section 24 of the Securities Act of 1933
B) Section 12 of the Securities Act of 1933
C) Section 5 of the Securities Act of 1933
D) SEC Rule 506
Q:
A novation revokes and discharges a prior contract.
Q:
The courts apply the Howey test in determining whether an arrangement is a(n) ________ and therefore a security.
Q:
Contracts that are executory on both sides can be rescinded by agreement.
Q:
Interests or instruments that are expressly mentioned in securities acts are ________ securities.
Q:
Debentures are an example of ________ securities.
Q:
Any breach of contract discharges the breaching party.
Q:
Quantity of LaborTotal ProductAverage ProductMarginal Product122222225226303812729410025195115231561262111Refer to the above table. At what quantity of labor does the marginal cost curve start to increase?A) After 1 unit B) After 2 units C) After 3 units D) After 6 units
Q:
The Securities and Exchange Commission (SEC) provides a(n) ________ which allows a person who provides information that leads to a successful SEC action to receive 10 percent to 30 percent of the money collected over $1 million recovered by the SEC.
Q:
Anything less than substantial performance is a material breach of contract.
Q:
The Securities and Exchange Commission (SEC) is an administrative agency composed of five members who are appointed by the ________.
Q:
If a contract requires performance to the personal satisfaction of a party, the party must in all cases be personally satisfied.
Q:
The ________ is a federal agency that is created by the Securities Exchange Act of 1934 and is empowered to administer federal securities laws.
Q:
A party who substantially performs his or her duties under a conÂtract can enforce the contract against the other party.
Q:
The ________ is a federal statute that primarily regulates the issuance of securities by companies and other businesses.