Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Business Law
Q:
To raise $12 million to expand operations, Star Corporation makes a stock offering directly to sixty accredited investors and twenty sophisticated, but unaccredited investors. Star plans to notify the SEC of sales. Under the Securities Act of 1933, this issue may qualify as an "exempt" transaction
A.as is.
B.if all of the investors are also given certain material information.
C.if the offering is also made available to the general public.
D.under no circumstances.
Q:
Fact Pattern 26-1
Fresh Goods, Inc., wants to make an initial public offering of securities. Fresh believes that it qualifies for an exemption under Regulation A from the full registration requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 26-1. If Fresh is exempt from the federal registration requirement, Fresh is
A.automatically exempt from any state registration requirement.
B.not subject to any state securities laws.
C.not necessarily exempt under a state registration requirement.
D.automatically subject to all state registration requirements.
Q:
Fact Pattern 26-1
Fresh Goods, Inc., wants to make an initial public offering of securities. Fresh believes that it qualifies for an exemption under Regulation A from the full registration requirement of the federal Securities Act of 1933.
Refer to Fact Pattern 26-1. Fresh decides to sell its new securities via the Internet. This offering
A.will avoid the payment of commissions to brokers or underwriters.
B.is an investment scam.
C.is a Ponzi scheme.
D.constitutes insider trading.
Q:
Kitsch Niche Corporation is a noninvestment company that wants to issue $3 million of stock in a twelve-month period. Kitsch Niche, with less than $20 million in annual sales, qualifies as a small business issuer. Before Kitsch Niche sells the stock, it must provide investors with
A.an offering circular.
B.a notice of the issue.
C.a red herring prospectus.
D.a tombstone ad.
Q:
Flo-Thru Corporation is poised to issue securities that, under the Securities Act of 1933, are "exempt." This means that the securities can be sold
A.on the basis of a material omission or misrepresentation.
B.on the basis of nonpublic information.
C.within any six-month period by certain insiders.
D.without being registered.
Q:
Olive Grove Enterprises, Inc., completes its registration process and issues a free-writing prospectus. This tells prospective investors
A.about investing freely.
B.how to write their own prospectus.
C.that they can "freely write their own ticket" to buy Olive's securities.
D.that they may obtain the prospectus at the SEC's Web site.
Q:
Celfone Corporation is required to file a registration statement with the Securities and Exchange Commission. This statement must contain
A.a copy of prospectuses to be provided to investors.
B.a description of securities being offered for sale.
C.a record of pre-registration sales in securities.
D.a sample of advertising to be used to attract investments in Celfone.
Q:
Squeaky Clean Corporation wants to make an offering of securities to the public. This offering is not exempt from registration under the Securities Act of 1933. Before Squeaky sells its securities, it must provide investors with
A.a forward-looking financial forecast.
B.an investment contract.
C.a prospectus.
D.samples of its products.
Q:
Bild-It-Rite Corporation is a public company that is preparing to issue securities that do not qualify for an exemption from registration. This means that Bild-It-Rite must
A.file a registration statement with the SEC.
B.issue the securities through an online registration site.
C.refrain from issuing the securities to unregistered investors.
D.register the securities with a national stock exchange.
Q:
Readmore Bookstore Corporation files a registration statement with the Securities and Exchange Commission and provides a prospectus describing the securities to investors. These items are intended to provide sufficient information so that the financial risks involved can be evaluated by
A.market professionals to explain to all investors.
B.government regulators to disclose to the general public.
C.sophisticated investors only.
D.unsophisticated investors.
Q:
RingTone Corporation is a public company whose securities are traded among investors. Under the Securities Act of 1933, a security is
A.almost any stake in the ownership or debt of a company.
B.an investment that is guaranteed to make a profit.
C.only such common forms of debt and equity as bonds and stocks.
D.whatever a company represents to the public as a security.
Q:
Frothy Beverage Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, Frothy is required to
A.contribute to the operations of national stock exchanges.
B.disclose financial and other information about its securities.
C.engage in market surveillance to deter undesirable practices.
D.solicit proxies for voting.
Q:
Cotton Products Corporation is a public company whose shares are traded in the public securities markets. The Securities Act of 1933 requires Cotton to disclose financial and other significant information concerning its securities in order to
A.increase corporate accountability by imposing responsibility on chief corporate executives.
B.prevent insiders from trading among themselves.
C.protect investors.
D.provide a "safe harbor" for companies that make forward-looking statements.
Q:
Pumping up a company occurs when a single person using multiple aliases on an online forum creates the illusion of widespread interest in a stock.
Q:
Corporations' chief executive officers are directly accountable for the accuracy of financial statements filed with the Securities and Exchange Commission.
Q:
Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to criminal prosecution.
Q:
Corporate governance can be defined as the relationship between a corporation and its directors.
Q:
State securities laws apply mainly to interstate transactions.
Q:
Generally, states have antifraud laws patterned after federal securities law.
Q:
"Blue sky laws" regulate securities data stored in cloud computing servers.
Q:
Private parties cannot sue violators of Section 10(b) and Rule 10b-5.
Q:
Violations of the Securities Exchange Act of 1934 may be subject to criminal prosecution.
Q:
A corporation can recapture any profits realized by an insider on any purchase or sale of the firm's stock within any six-month period.
Q:
Only outsiders who would ordinarily be deemed fiduciaries of the corporations in whose stock they trade can be liable for insider trading.
Q:
"Forward-looking" financial forecasts are prohibited under SEC Rule 10b-5.
Q:
Buying or selling securities on the basis of nonpublic information is illegal only if the profit from the transaction is unreasonable.
Q:
The key to liability under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is whether undisclosed inside information is material.
Q:
SEC Rule 10b-5 applies in relatively few cases involving the trading of securities.
Q:
Section 10(b) of the Securities Exchange Act of 1934 covers only corporate officers and directors.
Q:
SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or sale of any security.
Q:
The Securities Exchange Act of 1934 provides for continuous, periodic disclosures by publicly held corporations.
Q:
Any corporation with more than $10 million in assets and five hundred or more shareholders must register their securities with the Securities and Exchange Commission.
Q:
Private parties can sue violators of the Securities Act of 1933.
Q:
Against a charge of a violation of the Securities Act of 1933, only an issuer of stock can assert the due diligence defense.
Q:
Willful violations of the Securities Act of 1933 may be subject to criminal prosecution.
Q:
Securities that are exempt from the registration requirement can generally be sold and resold without being registered.
Q:
Few securities can be resold without registration.
Q:
Private offerings of securities in unlimited amounts can be exempt from the registration requirement of the Securities Act of 1933.
Q:
Securities of charitable organizations are not exempt from the registration requirement of the 1933 Securities Act.
Q:
Generally, stock offerings that involve a small dollar amount are exempt from the registration requirement.
Q:
A corporation whose security does not qualify for an exemption can avoid the cost and complexity associated with registration.
Q:
Before filing a registration statement, an issuer must offer to sell securities.
Q:
A free-writing prospectus may be used before the Securities and Exchange Commission completes its review of a related registration statement.
Q:
Generally, stock offerings that are made in a limited manner during any twelve-month period are not exempt from the registration requirement.
Q:
Sales of securities must occur within five days of registration.
Q:
A registration statement must state how a corporation plans to use the proceeds from the sale of the securities.
Q:
A registration statement must include a financial statement certified by an independent public accounting firm.
Q:
The least common forms of securities are bonds issued by corporations.
Q:
In all states, Sports Fitness Club Company and other corporations can pay dividends from
A.gross profits.
B.net profits.
C.retained earnings.
D.surplus.
Q:
Ida, Jerzy, and Kit are the directors of Liberty Convenience Stores, Inc. Liberty has nine officers and forty-six shareholders. Dividends are ordered by the firm's
A.board of directors.
B.incorporators.
C.officers.
D.shareholders.
Q:
Lovey is a shareholder of Matchless Corporation with preemptive rights. With these rights, Lovey can
A.buy a prorated share of a new issue of stock before other buyers.
B.choose to have Matchless act exclusively in a certain area.
C."preempt" managerial decisions that affect shareholders.
D.sell a prorated share of a new issue of stock before other sellers.
Q:
Fiona owns one share of stock in GR8 Boards Corporation, as evidenced by a stock certificate. Fiona loses the certificate. Her ownership of the stock is
A.forfeited immediately.
B.forfeited within ten days of a third party's claim to ownership.
C.forfeited within thirty days if she cannot find the certificate.
D.not affected.
Q:
Odell, Prince, and Quinn are shareholders of Rite Corporation. Before a shareholders' meeting, they agree in writing to vote their shares together in a certain manner. Usually, such agreements are held to be
A.invalid and unenforceable.
B.oppressive and irresponsible.
C.suspect and voidable.
D.valid and enforceable.
Q:
Thor Power Products Corporation permits its directors to be elected by cumulative voting. This
A.allows minority shareholders to be represented on the board.
B.assures directors that they will be selected by their peers.
C.guarantees Thor's executive officers of the final choice.
D.ensures against persons who may "cloud" the corporate direction.
Q:
Zero Sum Games Corporation has forty-three shareholders. The minimum number that must be present at a meeting for a shareholders' vote is
A.all of the shareholders.
B.a quorum.
C.a proxy.
D.three of the shareholders.
Q:
Heidi and Ian are directors and shareholders of Globe Software, Inc. Heidi's written authorization to Ian to vote Heidi's shares at a Globe shareholders' meeting is
A.a violation of the duty of loyalty.
B.a preemptive right.
C.a proxy.
D.a quorum.
Q:
Gladys is a shareholder of Frozen Yogurt, Inc. As a shareholder, Gladys must approve
A.amending the bylaws.
B.declaring a corporate dividend.
C.hiring a chief executive officer.
D.issuing additional shares.
Q:
Naomi and Ogden are shareholders of MediCare Residences, Inc. As shareholders, they must approve
A.conducting a merger.
B.deciding to pursue new business opportunities.
C.terminating a managerial employee.
D.negotiating a contract between management and labor.
Q:
Genna is a director of Fashion NOW Corporation. Without informing Fashion NOW, Genna starts up Evertrendy, Inc., to compete. Genna is liable for breach of
A.no duty or rule
B.the business judgment rule.
C.the duty of loyalty.
D.the right of participation.
Q:
Chip is a director of Diners Restaurants, Inc. Chip would breach his duty of loyalty if he
A.becomes a director of Fluffy Mattresses, Inc., a noncompeting firm.
B.buys a controlling interest in Gulpin' Foods Corporation, a competing firm.
C.votes for Diners to buy a controlling interest in Eateries, Inc., which causes Diners to suffer a loss.
D.votes against Diners' purchase of a controlling interest in Eateries, Inc., which causes Diners to suffer a loss.
Q:
Rocco is a director of Spa Lids & Tubs, Inc. Under the standard of due care owed by directors of a corporation, Rocco's decisions must be
A.unwavering and unquestionable.
B.arguable and defensible.
C.informed and reasonable.
D.perfect and unassailable.
Q:
Luke is a director of Motor Parts Corporation. Luke makes decisions with respect to Motor Parts in good faith, in what he believes is the firm's best interest, and without violating any duties owed to it. If, despite these circumstances, Luke exercises poor business judgment, under the business judgment rule Luke is
A.immune from liability.
B.liable only to the extent that he gains as a result.
C.liable only to the extent that Motor Parts suffers as a result.
D.wholly liable.
Q:
Rafi, a director of Super Service Station Corporation, does not attend a board meeting for three years. During that time, Twyla, Super's president, makes improper loans that cost the company $100,000. Rafi is most likely
A.liable for negligence or mismanagement.
B.liable for violation of the business judgment rule.
C.not liable because missing meetings is an honest mistake.
D.not liable because missing meetings is only poor judgment.
Q:
Cara and Dru are officers of EZ Trucking Corporation. As corporate officers, the rights of Cara and Dru are
A.determined by their employment contracts.
B.specified in state corporation statutes.
C.the same as those of the directors.
D.the same as those of the shareholders.
Q:
Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most corporations, Coast-to-Coast's employees include its
A.board of directors.
B.incorporators.
C.officers.
D.shareholders.
Q:
Frawsty Corporation distributes beverages in the greater Northwest. Frawsty's board of directors can delegate some of its functions to
A.Frawsty's incorporators.
B.Frawsty's officers.
C.Frawsty's shareholders.
D.no one.
Q:
Melba and Leon are directors of Fresh Foods, Inc. The right of Melba and Leon to be notified of special meetings of the board is the right to
A.compensation.
B.indemnification.
C.participation.
D.self-dealing.
Q:
Sol is chairman of the board of Tasty Foods Corporation. Uma, a consumer, falls sick after eating a Tasty product. Uma sues Tasty, and Sol individually. Tasty may pay Sal's legal fees
A.only if Sol wins the suit.
B.only if Tasty wins the suit.
C.only if Uma wins the suit.
D.regardless of the outcome.
Q:
Reynaldo is a director of Quantum Mechanix Corporation. Reynaldo's rights, as a director, do not include a right to
A.indemnification.
B.inspection.
C.participation.
D.self-dealing.
Q:
Raul is chairman of the board of Swif-Vac Corporation. Pinky, a consumer, is injured while using a Swif-Vac product. Pinky sues Swif-Vac, and Raul individually. Swif-Vac may pay Raul's legal fees under
A.the director's right to certification.
B.the director's right to compensation.
C.the director's right to indemnification.
D.no circumstances.
Q:
Flite-Craft Corporation makes and sells aircraft parts. In most states, the minimum number of directors that must be present before Flite-Craft's board can transact its business is
A.all of the directors authorized in the articles or bylaws.
B.a majority of the number authorized in the articles or bylaws.
C.any odd number.
D.one.
Q:
The board of directors of Integral Components Corporation consists of Frida, Gayla, and Hart. A quorum is the minimum number of these directors
A.who must be at odds in a dispute to call for its resolution.
B.who must be present to validly transact business.
C.that the shareholders may remove from office at any one time.
D.whose positions must be vacant to warrant an election.
Q:
Sophie and Tiny incorporate their beverage-container business as U-Twist Products, Inc. The first board of directors may be appointed by the firm's
A.employees.
B.incorporators.
C.officers.
D.shareholders.
Q:
Lexy and Mort act as the incorporators for NuGame Corporation. After the first board of directors is chosen, subsequent directors are elected by a vote of NuGame's
A.board of directors.
B.employees.
C.officers.
D.shareholders.
Q:
Whit is a director of Vids Corporation. With respect to policymaking decisions necessary to the management of corporate affairs, Whit and the other Vids directors have responsibility for
A.all of the decisions.
B.only the decisions referred to them by the shareholders.
C.only the decisions referred to them by the officers.
D.none of the decisions.
Q:
Egan is a director of First Realty Corporation. As a director, Egan can act as an agent to bind First Realty
A.in all circumstances.
B.in no circumstances.
C.to any contract in which Egan does not have a conflict of interest.
D.to any contract that represents a corporate opportunity for First Realty.
Q:
A majority shareholder does not owe a fiduciary duty to minority shareholders under any circumstances.
Q:
Shares issued for more than their fair market value are known as watered stock.
Q:
Persons whose names appear in a corporation's stock book are ordinarily entitled to notice of shareholders' meetings and the right to vote.
Q:
A dividend may be paid from undistributed net corporate profits.