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Q:
The registration statement to be filed with the SEC includes:
A. statements which gives the holder the right to purchase securities at a stipulated price within a specified time limit.
B. a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise.
C. statements that show ownership of a bond, stock or other security.
D. financial statements and a report on operations, issued by a company to its shareholders at the company's fiscal year-end.
E. a detailed disclosure of financial information about the issuer and the controlling individuals involved in the offering of securities for sale to the public.
Q:
Under the 1933 Act, proof of intentional violation is usually required to impose:
A. criminal sanctions only.
B. criminal or civil sanctions.
C. criminal and pragmatic sanctions.
D. criminal, civil, and equitable (injunctive) sanctions.
E. pragmatic sanctions.
Q:
The Security Act of 1933 requires the preparation and distribution to potential investors of the:
A. registration statement only.
B. registration statement and prospectus.
C. prospectus and licensing agreement.
D. registration statement, prospectus, and licensing agreement.
E. licensing agreement.
Q:
Whistleblowers who first use a company's internal processes before reporting to the SEC are entitled to potentially higher financial rewards.
Q:
The regulation of securities began as a program to:
A. prohibit an individual's service as an officer or director.
B. recover triple damages in civil actions against a user of nonpublic information.
C. help the United States overcome the Great Depression of the 1930s.
D. eliminate liabilities for short-swing profits made by insiders.
E. help potential investors to make investment decisions based on less certain criteria.
Q:
A certificate of interest or participation in any profit-sharing agreement is an example of a(n):
A. stock.
B. bond.
C. treasury stock.
D. security.
E. debenture.
Q:
The SEC's right to conduct investigations is based on:
A. their quasi-executive power.
B. their quasi-legislative power.
C. their quasi-judicial power.
D. an executive order.
E. an injunction.
Q:
The SEC's adoption of rules and regulations relating to financial and other information furnished to the Commission comes under its _____ power.
A. quasi-judicial
B. executive
C. quasi-executive
D. quasi-legislative
E. bargaining
Q:
Restatements of financial reports have risen in number as a result of Sarbanes-Oxley because companies have made efforts to maintain appropriate compliance with the law.
Q:
Under the Sarbanes-Oxley Act, whistleblowers that suffer retaliation are able to recover civil damages and can be reinstated if terminated improperly.
Q:
The Consumer Financial Protection Board was established under the Dodd-Frank Act.
Q:
Sarbanes-Oxley provides protections for whistleblowers so that individuals are more willing to report the corruption that can lead to major scandals.
Q:
The blue sky laws can apply to securities subject to federal laws as well as to those securities exempt from the federal statutes.
Q:
The Uniform Securities Act has been the model for blue sky laws.
Q:
The Public Company Accounting Oversight Board (PCAOB) permits auditing firms to conduct a variety of nonauditing services.
Q:
Sarbanes-Oxley limits personal loans from a company to its executives to one loan of no more than $10,000, amortized over five years, at a time.
Q:
Proof of negligence leading to corporate mismanagement is not enough to prove a case of seller's fraud under Rule 10b-5.
Q:
A person cannot be considered an insider unless he/she owns at least 51 percent of a security.
Q:
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 tipster is a person who learns of nonpublic information from an insider.
Q:
Congress, through the PCAOB, limits the amount of damages private plaintiffs can recover and restricts attorney fees.
Q:
Under the 1933 Act, the statute of limitations begins to run the moment the untrue statement or communication containing an omission is made public.
FALSE
The statute of limitations is a defense for both civil and criminal liability. The basic period is one year. The one year does not start to run until the discovery of the untrue statement or omission. Or it does not start to run until the time such discovery would have been made with reasonable diligence.
Q:
The Securities Exchange Act makes it illegal to sell a security on a national exchange unless a registration is effective for the security.
Q:
A plaintiff in a Rule 10b-5 suit is not required to prove damages in order to prevail.
Q:
A defrauding seller usually benefits from an increase in the value of the securities.
Q:
Sarbanes-Oxley has increased the statute of limitations for various infringements of both the 1933 Act and the 1934 Act.
Q:
The burden of proof when alleging a due diligence defense is on the expert.
Q:
Fraud occurs when any material fact is omitted from a prospectus causing a statement to be misleading.
Q:
Liability traditionally has been imposed against violators even though they lacked any wrongful intent.
Q:
Plaintiffs can recover for harm done by false or misleading information in a prospectus even if the prospectus was not read or reviewed.
TRUE
Plaintiffs can recover for harm done by false or misleading information in a prospectus even if the prospectus is not read or reviewed.
Q:
The Securities Act of 1933 is a disclosure law with respect to the initial sale of securities to the public.
Q:
Contracts to buy and sell securities are finalized during the posteffective period.
Q:
The prospectus provides expert analysis of a particular security's expectations of future worth.
Q:
The law prohibits the sale of worthless securities.
Q:
It is legal to sell a covered security during the prefiling period.
Q:
The _____ to the Clayton Act prohibits all acquisitions in which the effect lessened competition substantially in any line of commerce in any section of the country.
A. Bricker amendment
B. Tyler precedent
C. Wheeler-Lea amendment
D. Robinson-Patman amendment
E. Celler-Kefauver amendment
Q:
The Celler-Kefauver amendment that plugged the stock versus asset loophole in the Clayton Act applies to:
A. only corporations.
B. only partnerships.
C. corporations and partnerships.
D. corporations, partnerships and sole proprietorships.
E. only sole proprietorships.
Q:
Securities laws are designed to protect the buying public by requiring accurate information so that they can make intelligent investment decisions based on factual information.
Q:
The Securities and Exchange Commission has both quasi-legislative and quasi-judicial powers.
Q:
Mobilink Telecom Inc. deals in the manufacture of mobile handsets. Broadcom deals in the manufacturing Bluetooth personal area network hardware systems and chips. The acquisition of Mobilink Telecom Inc. by Broadcom is an example of a _____.
A. vertical merger.
B. horizontal merger.
C. conglomerate merger.
D. geographic market extension merger.
E. freeze-out merger.
Q:
Anheuser-Bush, an American corporation, and InBev, a Belgian corporation, finalized a multibillion-dollar merger to form the largest beer company in the world. Anheuser-Bush and InBev, prior to the merger, each sold beer in many countries around the world, including both Belgium and the United States. This merger is best described as a:
A. vertical merger.
B. horizontal merger.
C. conglomerate merger.
D. congeneric merger.
E. product market extension merger.
Q:
A merger in which the companies neither compete nor are related as a customer or supplier is called a:
A. product market extension merger.
B. vertical merger.
C. horizontal merger.
D. conglomerate merger.
E. geographic market extension merger.
Q:
Your school decides to expand and open a new campus in another state. Rather than acquiring land and building new buildings, the school board decides to merge with an existing school that has similar programs in the other state. The school you're merging with is a small commuter school with no dorms. 98% of its students are not only instate, but from the city the school is located in. This merger would be best described as a:
A. vertical merger.
B. geographic market extension merger.
C. product market extension merger.
D. horizontal extension merger.
E. conglomerate merger.
Q:
One party offers to buy the other's goods but only if the second party buys other goods from the first party. This is known as a(n):
A. franchise contract.
B. exclusive dealing contract.
C. reciprocal dealing contract.
D. tying contract.
E. requirements contract.
Q:
When a product is sold only on condition that the buyer also purchases a second different product from the seller, the transaction is called a/an:
A. executory contract.
B. exclusive dealing contract.
C. reciprocal dealing agreement.
D. tying agreement.
E. licensing agreement.
Q:
Full-line forcing is a typical form of a:
A. reciprocal agreement.
B. exclusive dealing contract.
C. requirements contract.
D. tying agreement.
E. licensing agreement.
Q:
Joshua owns orange groves. He enters into a contract with the local food processing plant whereby he would sell oranges only to that particular food processing plant. Joshua has entered into a contract which would be termed as a(n):
A. instalment contract
B. exclusive dealing contract
C. reciprocal dealing contract
D. tying contract
E. franchise contract
Q:
In a _____, a buyer agrees to purchase all of its needs of a given contract from the seller during a certain period of time.
A. franchise contract
B. instalment contract
C. reciprocal dealing contract
D. tying contract
E. requirements contract
Q:
Predatory pricing was declared illegal by the:
A. Robinson-Patman Act.
B. Federal Trade Commission Act.
C. Sherman Act.
D. Wheeler-Lea amendment to the Clayton Act.
E. Gramm-Rudman-Hollings Act.
Q:
_____ refers to the act of pricing below marginal cost by a company willing and able to sustain losses for a prolonged period to drive out competition.
A. Transfer pricing
B. Rational pricing
C. Congestion pricing
D. Predatory pricing
E. Psychological pricing
Q:
The _____, as permitted by the Robinson-Patman amendment refers to price differentials based on differences in the cost of manufacture, sale, or delivery of commodities.
A. good-faith meeting-of-competition defense
B. mobile defense
C. position defense
D. changing conditions defense
E. cost justification defense
Q:
Which of the following statements holds true for the good-faith meeting-of-competition defense as permitted by the Robinson-Patman amendment?
A. It applies to a situation when sellers may select their own customers in good-faith and not in restraint of trade.
B. It applies to a situation when there could be price differentials based on differences in the cost of manufacture, sale, or delivery of commodities.
C. It applies to a situation which involves the setting up barriers to market entry around a product, brand, product line, market, or market segment.
D. It applies to a situation when a seller in good faith may meet the equally low price of a competitor.
E. It applies to a situation when price changes may be made in response to changing conditions such as sales in good faith in discontinuance of business in the goods concerned.
Q:
The _____, as permitted by the Robinson-Patman amendment, applies to a situation in which price changes may be made in response to events like actual or imminent deterioration of perishable goods and obsolescence of seasonal goods.
A. good-faith meeting-of-competition defense
B. mobile defense
C. cost justification defense
D. changing conditions defense
E. position defense
Q:
An agreement between a manufacturer and a dealer that assigns the dealer or distributor an exclusive territory, while the manufacturer agrees to supply only that dealer in the territory is called a ______ territorial agreement.
A. vertical
B. conglomerate
C. congeneric
D. tying
E. per se
Q:
Regarding price fixing, which of the following is a correct statement?
A. Ethical standards may be used to fix prices, in which case, the price fixing is not subject to the Sherman Act.
B. It is legal for competitors to fix a low price if the consumer ultimately benefits.
C. Attempts by manufacturers to control the ultimate sale of their product are analyzed under the per se illegality.
D. The exchange of price information among creditors is a violation of the Sherman Act.
E. Cooperation and cosy relationships between competitors cannot be termed illegal.
Q:
Which of the following is true of the Clayton Act?
A. The original Clayton Act contained no sanction for forfeiture of property.
B. Organizations injured by a violation could obtain injunctive relief, but individuals could not.
C. Enumerated practices have to actually injure competition to be wrongful.
D. The burden of proving a violation was left to the plaintiff or victim.
E. No action could be taken unless a monopolistic practice substantially affected existing competitors.
Q:
The Robinson-Patman amendment gives the _____ jurisdiction and authority to regulate quantity discounts.
A. Consumers' Association
B. U.S. Consumer Product Safety Commission
C. Department of Commerce
D. Department of Justice
E. Federal Trade Commission
Q:
Attempts by manufacturers to control retail prices are known as _____ price fixing.
A. transfer
B. vertical
C. lateral
D. congestion
E. rational
Q:
The Colgate Doctrine allows:
A. resale price maintenance even under coercion.
B. a franchisor to require that franchisees purchase all of its equipment and inventory from them.
C. the FTC to regulate unfair and deceptive acts or practices in commerce.
D. natural monopolies to exist outside of Sherman Act jurisdiction.
E. manufacturers to set a price and refuse to deal with those that won't comply.
Q:
The president of soft drinks bottling company agreed with a competitor to stop discounts to retailers, which earned him a jail sentence. What was his crime?
A. Variable pricing
B. Vertical price-fixing
C. Resale price maintenance
D. Predatory conduct
E. Horizontal price-fixing
Q:
Vertical price fixing is also called:
A. resale price maintenance.
B. predatory maintenance.
C. linear price fixing.
D. express price fixing.
E. gold fixing.
Q:
In the mid-1970s, the Supreme Court interpreted the Sherman Act to include:
A. services.
B. goods.
C. interstate sale of goods.
D. real estate.
E. stocks.
Q:
Which of the following is true of the Sherman Act?
A. The Sherman Act applies only to the sale of goods.
B. Price fixing in the service sector is permitted under the Sherman Act.
C. Maximum-price agreements are illegal, while minimum-price agreements are not.
D. The Sherman Act covers services, including those performed by the learned professions.
E. An action is not considered to be price fixing if the prices fixed are fair or reasonable.
Q:
Which of the following is true of the triple damages awarded the injured parties under the Sherman Act?
A. It applies only to individuals, and not corporations or larger institutions.
B. Triple-damage suits cannot impose a fine in excess of any the could be imposed in a criminal proceeding.
C. It can only compensate the plaintiff for actual injury.
D. Only injured members of the general public can enforce the law.
E. Both federal and state governments can file a suit for triple damages.
Q:
Which of the following types of businesses enjoys a statutory exemption from the Sherman Act?
A. Insurance companies
B. Pharmaceutical companies
C. Educational institutions
D. Software companies
E. Consumer products companies
Q:
According to the Parker v. Brown doctrine:
A. the usual and legitimate union activity that is exempt from the Sherman Act.
B. concerted efforts to lobby government officials are not anticompetitive.
C. the Sherman Act does not apply to state government.
D. not all independent action by a manufacturer is a per se violation of the Sherman Act.
E. only unreasonable attempts to monopolize were covered by the Sherman Act.
Q:
In a 1943 case known as Parker v. Brown, the Supreme Court created a _____ exemption to the Sherman Act.
A. military
B. personal
C. participation
D. homestead
E. state action
Q:
Which of the following doctrines exempts certain lobbying activities from the Sherman Act?
A. Noerr-Pennington doctrine
B. Quick look doctrine
C. State action doctrine
D. Per se illegality doctrine
E. Doctrine of inherency
Q:
Which of the following was established by the Noerr-Pennington doctrine?
A. Concerted efforts to lobby government officials, regardless of the anticompetitive purposes of the lobbying effort are exempt from the provisions of the Sherman Act.
B. When a state acts in its sovereign capacity, it is immune from federal antitrust scrutiny.
C. Price fixing is illegal whether the parties to it have control of the market or not and whether or not they are trying to raise or lower the market price.
D. Resale price maintenance is legal only if there is no coercion or pressure other than the announced policy and its implementation.
E. Conduct directed at price stabilization is per se anticompetitive.
Q:
Pricing goods at a low level to discourage market entry by competitors is called:
A. congestion pricing.
B. exemption pricing.
C. limit pricing.
D. per se pricing.
E. variable pricing.
Q:
For a seller's pricing to be considered predatory conduct, there must be proof that:
A. the seller was selling the product at a price below the cost price.
B. the prices were intended to drive competitors out of business followed by the wrongdoer recouping these initial losses.
C. the prices were significantly lower than those of all competitors within the same product group.
D. the buyers were unwilling to buy the product at the seller's prices, and only bought the product from a lack of choice.
E. the buyer had other options in the same product line available in different price ranges.
Q:
The _____ holds that contracts or conspiracies in restraint of trade are illegal only if they constituted undue or unreasonable restraints of trade and that only unreasonable attempts to monopolize are covered by the Sherman Act.
A. rule of per se illegality
B. Parker v. Brown doctrine
C. rule of reason
D. duty-to-deal doctrine
E. Ker-Frisbie doctrine
Q:
The University of Dover and Dover University are bitter cross-town rivals. They compete in everything from sports to academics. The schools, because of shrinking enrollment, make an agreement to give all incoming students free tuition for one semester before raising the existing rates the following semester. This action would be considered:
A. a horizontal agreement in violation of the Sherman Act.
B. a vertical agreement in violation of the Sherman Act.
C. a tying agreement in violation of the Clayton Act.
D. a reciprocal dealing agreement violating the Clayton Act.
E. a licensing agreement violating the Clayton Act.
Q:
Which of the following is true of the Sherman Act?
A. Violations may be subject to criminal fines or imprisonment, but not both.
B. It covers antitrust activities by corporations, but not by individuals.
C. Violations of the Sherman Act may be enjoined by the courts.
D. Its sanctions are only civil punishments, and not criminal punishments.
E. Crimes under the Sherman Act are misdemeanors.
Q:
Game designers Troy and Jeff design a new computer game system, and it is manufactured and sold by their company, GameTech. The game system they devise uses new technology that they have created and far exceeds the capabilities of any current gaming systems. It is also so simple to manufacture that they can do so at a very minimal cost. When it hits the market it is so much better and cheaper than the "competition" that they all end up either in bankruptcy or simply withdrawing their products from the market. GameTech's system is now the only gaming system on the market.
A. GameTech is guilty of engaging in predatory conduct.
B. GameTech has a monopoly which violates the Sherman Act.
C. GameTech has a monopoly which does not violate the Sherman Act but violates the Clayton Act.
D. GameTech has a monopoly which does not violate either the Sherman or Clayton Act
E. GameTech is guilty of variable pricing.
Q:
Civil enforcement powers regarding federal antitrust matters belong to:
A. the FTC and the Department of Justice.
B. the Treasury Department.
C. the Department of Revenue and Taxation.
D. the courts.
E. Department of Labor
Q:
Which of the following statements holds true for monopoly power?
A. Mere possession of monopoly power violates Section 1 of the Sherman Act.
B. Monopoly power "thrust upon" a firm violates Section 2 of the Sherman Act.
C. Monopoly power which exists because of a patent or franchise violates the Clayton Act.
D. If the firm engages in conduct that has the effect of extending the monopoly power, it does not violate the Sherman Act.
E. Proof of monopoly power is insufficient to qualify as a violation of the Sherman Act.
Q:
The Federal Trade Commission Act was written without a specific definition of what constituted "unfair methods of competition" to allow the FTC to determine whether it existed on a case by case basis.
Q:
The Federal Trade Commission is tasked with determining whether unfair methods of competition exist but the Commission is not empowered to issue trade rules and guides.
Q:
The person who holds legal title to trust property for the benefit of another is the:
A. beneficiary.
B. bailor.
C. bailee
D. benefactor.
E. trustee.