TBCh22F - CHAPTER 22 Public and Private Offerings of...

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C H A P T E R 2 2 Public and Private Offerings of Securities T RUE -F ALSE Q UESTIONS 1. The Securities Act of 1933 is also referred to as the “blue sky” law. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 2. The Securities Act of 1933 requires promoters of securities offerings to register them with the Treasury Department. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 3. Under the Securities Act of 1933, an investor may bring a private suit for damages. ANSWER: True SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 4. Investors are prohibited under federal securities law from making highly speculative investments. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 5. The SEC has the statutory authority to approve or disapprove an offering on its merits. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 6. The Securities Act of 1934 requires continuous disclosure of certain information regarding publicly traded securities. ANSWER: True SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 7. A “red herring” is the popular name given to the final prospectus under the 1933 Act. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 8. The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board. 75
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76 MANAGERS AND THE LEGAL ENVIRONMENT ANSWER: True SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 9. The Sarbanes-Oxley Act does not address the provision of nonaudit services to audit clients of an accounting firm. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 10. Shelf registration under the Securities Act of 1933 allows registration of a number of securities at one time for issuance later. ANSWER: True SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 11. A secondary offering is the subsequent offering of securities by the original issuer. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 12. The term “security,” for purposes of the Securities Act of 1933, is narrowly interpreted to include only such traditional investments as a stock or a bond. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 13. A best-efforts underwriting of securities leaves the risks of the offering with the issuer. ANSWER: True SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 14. Proxies give the proxy holder the right to vote the shares owned by the person who signs the proxy card. ANSWER: True SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 15. The SEC now requires that all documents filed under the Securities Act of 1933 be written in plain English. ANSWER: False SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 16. Section 11 of Securities Act of 1933, which provides a remedy for a person who purchases a security pursuant to a misleading registration statement, allows class action suits.
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CHAPTER 22 PUBLIC AND PRIVATE OFFERINGS OF SECURITIES 77 ANSWER: True SKILL LEVEL: AACSB Analytic OBJECTIVE: AICPA Legal 17. The defenses of due diligence under Section 11 of the Securities Act of 1933 is not available to
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This note was uploaded on 10/18/2011 for the course BUSS 240 taught by Professor Na during the Fall '10 term at Strayer.

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TBCh22F - CHAPTER 22 Public and Private Offerings of...

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