During the late 1920s, approximately 55 percent of all personal savings in the United States were used to purchase securities. Public confidence in the business community was extremely high as stock values doubled and tripled in short periods of time. The road to wealth was believed to be through the stock market, and everyone who was able participated. Thus, the public was severely affected when the Dow Jones Industrial Average fell 89 percent between 1929 and 1933. The public outcry arising from this decline in stock prices motivated the passage of major federal laws regulating the securities industry.

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a. Describe the investment practices of the 1920s that contributed to the erosion of the stock market.

b. Explain the basic objectives of each of the following:

(1) Securities Act of 1933 .

(2) Securities Exchange Act of 1934 .

c. More recent legislation has resulted from abuses in the securities industry. Explain the provisions of the Foreign Corrupt Practices Act of 1977.