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Chapter Quiz
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1
The Sarbanes-Oxley Act of 2002 does not impose any duties on corporations.
A)True
B)False
2
The Securities Exchange Acts of 1933 and 1934 broadly define the term security.
A)True
B)False
3
A firm commitment underwriting occurs when the underwriters obtain share subscriptions from investors, but sell the securities only upon sufficient demand from the investors.
A)True
B)False
4
An issuer may be exempt from the registration requirements under the SEC Act of 1933 if the issuer reasonably believes that each purchaser of the security is an accredit investor.
A)True
B)False
5
Issuers who have assets in excess of $10 million and who have any class of equity securities with 500 or more shareholders must register their securities under the SEC Act of 1934, which may also require annual, quarterly, and monthly reports to the SEC and to shareholders.
A)True
B)False
6
Insider trading may only occur if an officer, director, or employee of the corporation trades in a corporation's stock using inside information.
A)True
B)False
7
The United States Supreme Court's Howey test:
A)is usually narrowly construed by the courts.
B)defines investment contracts as "securities" if they involve investments whereby the profits are derived solely from the efforts of others.
C)requires that any contract possessing the term "stock" in its name be deemed a security.
D)states that consumer notes, mortgage notes, short-term notes secured by a lien on a small business are each deemed to be securities.
8
The Sarbanes-Oxley Act of 2002:
A)prohibits a corporation's audit firm from performing most types of consulting services for the corporation .
B)requires public companies to disclose whether they have ethics codes for their officers.
C)requires the CEO and CFO of a public company to certify that the corporation's financial reports fairly present the company's operations and financial condition.
D)Both A and C
E)All of the above
9
The characteristics of notes that are not securities include:
A)There is no recognized market for the securities.
B)The buyer of the note does not need the protection of the securities laws.
C)The buyer of the note has no investment intent.
D)Both A and B
E)All of the above
10
Canadian securities law:
A)is similar to American law.
B)in general, does not require foreign issuers to file a prospectus with a securities commissioner.
C)is enacted by the Canadian national government.
D)None of the above





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