Q&A Hero

Q: The Security Act of 1933 requires the preparation and distribution to potential investors the following documents: I. Registration statement II. Prospectus III. Certified financial statements A.I. B.I and II. C.II and III. D.I, II and III.

Q: Which of the following is not a defense to civil liability under the Securities Act of 1933? A.Materiality. B.Statute of limitations. C.Due diligence. D.Assumption of risk.

Q: Who, under Sarbanes-Oxley, is required to certify the accuracy of the company's financial records? I " the CEO II " the COO III " the CFO A.I and II. B.II and III. C.I and III. D.I, II and III.

Q: The Public Company Accounting Oversight Board was created by the: A.Securities Act of 1933. B.Securities Exchange Act of 1934. C.Security Fraud Enforcement Act D.Sarbanes-Oxley Act.

Q: In Stoneridge Investment Partners, LLC, Petitioner v. Scientific-Atlanta, Inc., et al., the Supreme Court found that: A.The 1934 Act specifically provides for a private cause of action under Rule 10(b) that does not extend to third parties that are not directly involved with a securities fraud. B.The 1934 Act specifically provides for a private cause of action under Rule 10(b) that does extend to third parties that are not directly involved with a securities fraud. C.The 1934 Act does not specifically provide for a private cause of action under Rule 10(b) but the courts have properly found an implied right for a private cause of action that extends to third parties that are not directly involved with a securities fraud. D.The 1934 Act does not specifically provide for a private cause of action under Rule 10(b) but the courts have properly found an implied right for a private cause of action that does not extend to third parties that are not directly involved with a securities fraud.

Q: Sarbanes-Oxley requires that information pertaining to an insider's transaction be filed: A.By mail postmarked within two days of the transaction. B.Electronically within two days of the transaction. C.By any effective means within 10 days of the transaction. D.By any effective means within 10 days after the close of the calendar month in which the transaction occurred.

Q: Plaintiffs can recover for harm done by false or misleading information in a prospectus even if the prospectus was not read or reviewed.

Q: Fraud occurs when any material fact is omitted from a prospectus causing a statement to be misleading.

Q: Securities laws are designed to protect the buying public by requiring accurate information to be disclosed.

Q: The Uniform Securities Act has been the model for state blue sky laws.

Q: A tipster is a person who learns of nonpublic information from an insider.

Q: Enforcing Sarbanes-Oxley, the SEC applies the misappropriation theory of insider trading to force executives who file or certify incorrect financial statements to return bonuses and additional compensation received.

Q: A plaintiff in a rule 10b-5 suit is not required to prove damages in order to prevail.

Q: You cannot be considered an insider unless you own at least 51% of a security.

Q: Proof of negligence leading to corporate mismanagement is not enough to prove a case of seller's fraud under Rule 10b-5.

Q: The law does not prohibit the sale of worthless securities.

Q: Restatements of financial reports have risen in number as a result of Sarbanes-Oxley as companies have made efforts to maintain appropriate compliance with the law.

Q: If a party is sued under section 10(b), they may legally seek contribution from third parties.

Q: Sarbanes-Oxley created the crime of conspiring to commit securities fraud.

Q: The prospectus provides expert analysis of a particular security's expectations of future worth.

Q: Contracts to buy and sell securities are finalized during the post effective period.

Q: Sarbanes-Oxley limits personal loans from a company to its executives to one loan of no more than $10,000, amortized over 5 years, at a time.

Q: Under the Act of 1933, the statute of limitations begins to run the moment the untrue statement or communication containing an omission made public.

Q: The burden of proof when alleging a due diligence defense is on the expert.

Q: Sarbanes-Oxley has increased the statute of limitations for various infringements of both the 1933 Act and the 1934 Act.

Q: The Securities Act of 1933 is a disclosure law with respect to the initial sale of securities to the public.

Q: Limited partners: A.Are personally responsible for debts of the business. B.Control operations of the limited partnership. C.May assign their interest in a business to another person without dissolving the limited partnership. D.All of the above.

Q: A corporate charter is issued following an application made by individuals known as: A.Incorporators. B.Corporate officers. C.Board members. D.Corporate impanelers.

Q: Moe, Larry and Curly have formed a partnership. Each is a full general partner and due to poor management they have quickly run up $3 million in debt. If their creditor sues: A.Each is liable for $1 million dollars. B.The creditor must sue all three simultaneously C.The creditor must sue at least two of the three must be sued and could be liable for the entire $3 million. D.The creditor may sue any one of them for the entire $3 million.

Q: Majority stockholders: A.Have no influence on management. B.Can control the election of the board of directors. C.Cannot be employed by the corporation. D.Have the same impact on policy as minority stockholders.

Q: Corporations: A.Are more costly to form than partnerships. B.Are created by the issuance of a charter. C.Must have a name that ends with an abbreviation to indicate incorporation. D.All of the above.

Q: A corporation is: A.Created under federal law. B.Created under state law. C.Created by a Constitutional mandate. D.Regulated only by local statutes.

Q: Which of the following is a disadvantage of a partnership? A.The cost of formation is low. B.They are based on consensual contracts. C.They are subject to less governmental supervision than corporations. D.A partnership will be dissolved any time a partner leaves the partnership.

Q: Partners in a general partnership: A.Pay no personal income tax on partnership profits. B.Pay personal income tax if profits are dispersed. C.Pay personal income tax on their share of profits, etc. from the partnership. D.None of the above.

Q: All partners in a general partnership have: A.Limited liability. B.Unlimited liability. C.No responsibility for the partnership's debts. D.Unequal responsibility for their partnership's debts.

Q: A general partnership: A.Is dissolved any time there is a change in partners. B.Can be transferred to new owners without affecting the original agreement. C.Has no liability. D.Is taxed as an entity.

Q: The formal agreement to form a partnership is called the: A.Articles of confederation. B.Articles of incorporation. C.Articles of partnership. D.Declaration of partnership.

Q: A partnership must have: A.One or more people. B.No personal liability. C.A non-profit focus. D.A common interest in business.

Q: A partnership may be owned by: A.Two or more individuals. B.An individual and a corporation. C.A partnership and a corporation. D.All of the above.

Q: A sole proprietorship is a business:A.Owned by one person.B.Owned by one family.C.That has only one location.D.Doing business in only one state.

Q: Philip wants to form a partnership and is looking for a partner or two. Which of the following would be considered a "person" when creating a partnership? A.Another partnership. B.A corporation. C.A sole proprietorship. D.Each of the above would be a person for creating a partnership.

Q: Organizations owned by hundreds or thousands of people are said to be: A.Publicly held. B.Closely held. C.Partnerships. D.Sole proprietorships.

Q: The most difficult and complicated business organization to create is the: A.Sole proprietorship. B.Partnership. C.Limited partnership. D.Corporation.

Q: Significant factors to consider in selecting the form of business include all of the following except the: A.Cost of creating the business. B.Personal liability of the owners. C.Control of decisions. D.State of creation.

Q: The crucial issue with the continuity factor of a business's organizational form is: A.Management style. B.Profit distribution. C.The method by which the business can be dissolved. D.The method of customer service observed.

Q: "Creation" means: A.The legal steps required to form a particular business organization. B.The concept of a business. C.The intent to create a business. D.A paradigm shift in a business.

Q: In a limited liability company, members act as agents of the LLC but are not personally liable to third parties.

Q: USD Corporation is incorporated in the state of Delaware and does business in all 50 states. USD is considered a domestic corporation in all 50 states.

Q: A limited partnership is solely made up of limited partners.

Q: A proxy is an agent appointed by directors for the purpose of voting shares of stock.

Q: A corporation is known as a domestic corporation only in the state in which it is incorporated.

Q: While state laws recognize LLCs as nontaxable entities, the IRS treats the LLCs as taxable entities.

Q: Dissolution means that there has been a change in the ownership of an organization that changes the legal existence of the organization.

Q: Any operating loss suffered by an S corporation is shared and immediately deductible on the returns of its shareholders.

Q: A limited partner, even if he participates in management, cannot be held liable as a general partner.

Q: Closely held corporations do not sell stock on a public exchange.

Q: A limited partner may assign his or her interest to another without dissolving the limited partnership.

Q: Partnerships are tax-paying entities.

Q: Reed and Shedd are jointly and severally liable to Corley for $100,000 in damages. Corley can collect $100,000 from Reed, $100,000 from Shedd, and $100,000 from Reed and Shedd.

Q: A partnership is dissolved any time a partner dies.

Q: A partnership can be formed by an express agreement but not an implied agreement.

Q: Domestic corporations are created within the U.S. and foreign corporations are created in countries outside of the U.S.

Q: A sole proprietorship is a business owned by one person.

Q: A large, publicly held business is typically a corporation.

Q: Shareholders elect the officers of the corporation.

Q: Usually the cost of creation of a business entity is not a major factor in considering which form of operation to choose.

Q: You have been asked to join a partnership. What must you consider when choosing to become a general or limited partner?

Q: What are the steps that must be taken in order to form a corporation and what are the typical types of costs involved?

Q: You have just graduated and you have decided to start your own business. You have chosen to open a bicycle shop. What type of business organization will you choose and explain its benefits and difficulties in detail.

Q: What are some of the business activities a limited partner may engage in?

Q: Explain why corporations are said to be double taxed.

Q: How is control decided in publicly held and closely held corporations?

Q: What are the main advantages and disadvantages of partnerships?

Q: What is the purpose of a buy and sell agreement and when are they needed?

Q: One of the newer trends in corporate governance is the concept of say-on-pay. What is say-on-pay and how does it affect corporate governance?

Q: What factors should be considered when selecting the best organizational form for a particular business?

Q: Which of the following is not an advantage of a partnership? A.Partnerships may operate in more than one state without obtaining a license to do so. B.Partnerships are generally subject to less regulation and governmental supervision than corporations. C.Each general partner's liability is unlimited. D.Costs of formation are not significant.

Q: In Arthur Anderson LLP v. United States, the court examined the meaning of the term "corruptly persuades" with regard to the company's order to shred documents and determined: A.An order to shred documents constitutes corrupt persuasion even when there is no knowledge that the documents would be material to a subsequent proceeding. B.An order to shred documents constitutes corrupt persuasion only when there is knowledge that the documents would be material to a subsequent proceeding. C.A company can never be guilty of corrupt persuasion when having employees perform an act within the employee's job description or responsibilities. D.Corrupt persuasion can only occur if an action is taken or ordered after a proceeding is started but not while the proceeding is only foreseen.

Q: Which of the following business organizations do not pay taxes but must still file an information return with the IRS? I. Partnerships II. S Corporations III. Corporations A.I. B.II. C.I and II. D.II and III.

Q: If a corporate entity is disregarded by officers or directors so that there is such a unity of ownership and interest that separateness of the corporation has ceased to exist, the corporate veil may be pierced based on the: A.Alter ego theory. B.Negligent conduct theory. C.Corporate confusion theory. D.Corporate envelopment theory.