1. Regarding audited financial statements, to prove due diligence under Section 11 of the Securities Act of 1933, an officer of the issuer must prove which of the following?

Multiple Choice

• The officer made a reasonable investigation into the accuracy of the audited financial statements
• The officer believed the financial statements did not omit or misstate a material fact
• The officer had no intent to misstate or omit a material fact in the audited financial statements
• The officer had no reason to believe the financial statements omitted or misstated a material fact

2. General Motors (GM) selling $5 billion of its notes to twenty-five (25) mutual funds plus five (5) other, unaccredited investors is an example of a __________ company making a __________ offering under Rule 506 of the Securities Act of 1933's Regulation D.

Multiple Choice

• nonpublic; public
• public; public
• public; nonpublic
• private; private

3. Which of the following is correct concerning the Foreign Corrupt Practices Act (FCPA)?

Multiple Choice

• Under the FCPA, a company may be fined up to $5 million.
• Under the FCPA, directors participating in violations may be subject to prison terms up to ten (10) years.
• The FCPA bribery provisions apply only to United States firms with equity securities registered under the 1934 Act.
• Facilitating or grease payments are not prohibited by the FCPA.

4. Generally, statements made within __________ days of filing a registration statement are considered an attempt to pre-sell securities during the __________ period.

Multiple Choice

• thirty (30); marketability
• sixty (60); marketability
• thirty (30); quiet
• sixty (60); quiet

5. Section 4(a)(2) of the __________ provides that the its registration requirements "shall not apply to transactions by an issuer not involving any __________ offering."

Multiple Choice

• Securities Act of 1933; public
• Securities Act of 1933; private
• Securities Exchange Act of 1934; public
• Securities Exchange Act of 1934; private

6. Three Big Swine Meat Packing Company (TBS) is a meat processing business. To reduce costs and increase profits, TBS's president and chief executive officer (CEO) orders the company's employees to violate federal criminal meat processing laws. The United States Department of Justice prosecutes TBS for criminal violations of the meat processing law. Has TBS committed criminal violations?

Multiple Choice

• No, since a corporation is not liable for most crimes committed by its agents
• Yes, since a corporation is liable for all crimes committed by its agents
• No, since the board of directors did not authorize the president and CEO or the other employees to violate federal law
• Yes, since TBS's president and CEO, a high-level administrator of the company, authorized commission of the crimes

9. If a transaction involves no __________, the law of securities regulation not apply.

Multiple Choice

• net profit
• security
• dividends
• preferred stock

10. The Model Business Corporation Act (MBCA) states that a corporation has the power to __________.

Multiple Choice

• that is within its bylaws
• permitted by state statute
• that an individual may think
• that is objectively reasonable and consistent with industry standards

12. Which of the following expresses whether the audit has been performed in compliance withgenerally-accepted auditing standards (GAAS) and whether, in the auditor's opinion, the financial statements fairly present the client's financial position and results of operations in conformity withgenerally-accepted accounting principles (GAAP)?

Multiple Choice

• An opinion letter
• An advisory opinion
• A right-to-sue letter
• A compliance letter

13. The Securities and Exchange Commission's (SEC's) oversight authority over the Public Company Accounting Oversight Board (PCAOB) includes which of the following?

Multiple Choice

• The approval of its Board'srules only
• The approval of its Board's rules and standards only
• The approval of its Board's budget only
• The approval of its boards' rules, standards, and budget