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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:
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:
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:
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:
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:
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:
________ 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:
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:
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:
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:
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:
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:
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 contract will be discharged if foreseeable circumstances make it impossible to attain the contract's purpose.
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:
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:
Performance of an accord discharges an original contractual obligation.
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:
When a contract party alters a written contract, the other party must adapt his or her performance accordingly.
Q:
The courts apply the Howey test in determining whether an arrangement is a(n) ________ and therefore a security.
Q:
A novation revokes and discharges a prior contract.
Q:
Interests or instruments that are expressly mentioned in securities acts are ________ securities.
Q:
Contracts that are executory on both sides can be rescinded by agreement.
Q:
Debentures are an example of ________ securities.
Q:
Any breach of contract discharges the breaching party.
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.
Q:
Performance that provides a party with most of the benefits of a conÂtract, in spite of a deviation from the terms, is complete performance.
Q:
Interests in oil, gas, and mineral rights are considered statutorily defined securities.
Q:
Concurrent conditions occur only when the parties to a contract are reÂquired to perÂform their respective duties simultaneously.
Q:
The Howey test is used to determine if an arrangement is an investment contract.
Q:
A condition subsequent terminates a party's promise to perform.
Q:
An investment contract is a flexible standard for defining a security.
Q:
If a contract condition is not satisfied, the obligations of the contracting parties are discharged.
Q:
The SEC is concerned with regulating issues and trading of securities alone and cannot regulate the activities of securities brokers and advisors.
Q:
The most common way to discharge a contract is by breach.
Q:
A "whistleblower bounty program" allows a person who provides information that leads to a successful SEC action in which more than $1 million is recovered to receive 10 percent to 30 percent of the money collected.
Q:
An event must be certain to occur to constitute a contract condition.
Q:
The Securities Act of 1933 regulates the issuance and sale of securities online.
Q:
Continuous reporting to investors and the SEC is a requirement imposed by the Securities Act of 1933.
Q:
Any third party beneficiary to a contract who is not an intended beneficiary is incidental.
Q:
The Securities Act of 1933 is a federal statute that primarily regulates the issue of securities by companies and other businesses.
Q:
An incidental beneficiary can sue directly to enforce a promisee's promise.
Q:
An "asÂsignment of all rights" absolves the assignor of all liability under the contract that created the rights.
Q:
Courts apply the ________ in determining whether an arrangement is an investment contract.
A) Howey test
B) misappropriation theory
C) strict scrutiny test
D) intermediate scrutiny test
Q:
A(n) ________ is a flexible standard for defining a security.
A) red herring prospectus
B) investment contract
C) certificate of interest
D) debenture
Q:
A delegation relieves the party making it of the obligation to perÂform.
Q:
A delegatee is a party who transfers his or her obligation under a contract to another party.
Q:
Interests in oil, gas, and mineral rights are classified as ________.
A) statutorily defined securities
B) implicit securities
C) investment contracts
D) common securities
Q:
No special form is required to create a delegation of duties.
Q:
Interests or instruments that are expressly mentioned in securities acts are known as ________.
A) common securities
B) implicit securities
C) investment contracts
D) statutorily defined securities
Q:
A right to receive damages on a breach of a contract for a sale of goods may be assigned.
Q:
Which of the following is classified under "common securities"?
A) real estate
B) bullion
C) a debenture
D) a bank deposit account
Q:
The assignment of the same contract right to two different parties results in their "splitting the difference."
Q:
Which of the following is regulated by the Securities Act of 1933?
A) fraud in mortgage transactions
B) hedge funds and derivatives
C) reporting to investors
D) the issue of securities online
Q:
The ________ is a federal statute primarily designed to prevent fraud in the trading of securities after they are issued.
A) Securities Act of 1933
B) Securities Exchange Act of 1934
C) Sarbanes-Oxley Act of 2002
D) Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
Q:
A contract can prevent the assignment of the right to receive funds.
Q:
The ________ is a federal statute that primarily regulates the issuance of securities by companies and other businesses.
A) Securities Act of 1933
B) Securities Exchange Act of 1934
C) Sarbanes-Oxley Act of 2002
D) Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
Q:
All rights can be assigned.
Q:
An unconditional assignment of rights in a contract will extinguish the rights of the asÂsignor.
Q:
Secret profits obtained by a director or officer cannot be recovered by a corporation.
Q:
An obligor is a person to whom a duty is owed.
Q:
The duty of loyalty requires directors and officers to subordinate their personal interests to those of the corporation and its shareholders.
Q:
The determination of whether a corporate director or officer has met his or her duty of care is measured in hindsight.
Q:
The person to whom rights in a contract are assigned is the assignor.