1.Section IO(b) of the 1934 Act

a. prohibits fraud only in cases of the sale of securities registered under the Act.

b. prohibits proxy solicitations by insiders.

c. prohibits fraud in connection with the purchase and sale of any security

d. prohibits short swing profits by insiders.

2.Which of the following is the best statement of the principal purpose of the federal securities laws?

a.Provide the SEC with the information necessary to determine the accuracy of the facts presented in the financial statements.

b.Prevent public offerings of securities in which management fraud or unethical conduct is suspected.

c.Provide the SEC with the information necessary to evaluate the financial merits of the securities being offered.

d.Assure that the investors have adequate information upon which to base investment decisions.

3.Which of the following statements is FALSE?

a.Offerings under Regulation D, Rule 506 have no limits on the amount that can be raised.

b.To determine if an individual qualifies as an accredited investor, their net worth caninclude equity in their home.

c.To obtain an exemption for an Offering under Regulation D, Rule 506, the stock cannotbe advertised publicly and stock purchased cannot be resold for I year.

d.An accredited investor includes individuals who have a net worth of $1 million or annualincome of $200,000.

4.Which of the following statements is false?

a. The 1934 Act requires public companies to make regular filings with the SEC.

b. Emerging Growth Companies are only required to provide 2 years of audited financials

when undertaing an Initial Public Offering.

c. Anyone who trades on inside information has violated federal securities laws.

d. Insider trading is a crime and can lead to fines and imprisonment.

5.Raul was an investment banker who sometimes bragged about deals he was working on. One night while at

the Flatrock Saloon he told a bartender, Sallie, about an upcoming merger he was working on. He liked Sallie

and told her that the information was confidential and not to tell anyone as he could get in trouble at work if

anyone found out. Sallie bought stock in the company Raul had mentioned. Which statement is true?

a. Raul is not liable because he did not engage in insider trading.

b. Raul is liable for participating in a short swing profit.

c. Raul is not liable since he did not personally benefit from Sallie's stock purchase.

d. Raul is liable for insider trading even though he did not trade in the stock himself.

6.In the JOBS ACT of 2012 a "crowdfunding" provision was included. Which of the following statements

would be true about recent regulations the SEC approved regarding "crowdfunding"?

a.The new regulations permit anyone to sell stock in their business directly over theinternet to any buyer without any registration with the SEC..

b.The new regulations aim to promote raising of capital and require that the securities besold through an approved intermediary such as a broker or funding portal.

e.The new regulations will prevent fraud.

d.The regulations will eliminate the high risk usually associated with start-ups and preventthe fraudulent sale of stock in non-existent companies.

7.Which of the following statements is correct?

a.Investors generally do not receive the company's prospectus, it is reserved for investment banks

b.Investors generally receive a copy of the registration statement.

c.A prospectus provides disclosure about the offering but does not include as muchinformation as the registration statement, such as information that would be of interest tothe SEC but not the typical investor.

d.A company making an offering may sell stock from the offering prior to SEC approval ofthe registration statement if the investors waive their rights in writing.

8.Raul was an investment banker who sometimes bragged about deals he was working on. One night while atthe Flatrock Saloon he told a bartender, Sallie, about an upcoming merger he was working on. Sallie boughtstockin the company Raul had mentioned. Sallie would probably not be liable for insider trading because

a. she did not know the information was confidential and that he was an insider who wasviolating his fiduciary du.y.

b. she did not work for Raul's company

c. she obtained the information while she was in the scope of her employment.

d. even though she knew the information was confidential, she did not initiate theconversation.

9.Flatrock Inc. is incorporated in Nebraska and does all of its business within the state. It wants to issue stockto some local investors to help them expand their business into Hooker, Cherry and Logan County Nebraska.They plan to raise 2 million by only selling to Nebraska residents and all the proceeds will be used in

Nebraska. What Exemption under the 1933 Act applies best to this offering?

a. Regulation D Rule 505

b. Rule 147 Intrastate Offering

c. Regulation D Rule 506

d. Regulation A

10. Wizzer attends a high school track meet to watch his daughter pole vault for the Flatrock Fillies. Prior to the meet starting, Wizzer visits with Berk and other parents who have children participating in the meet. Berk is the CEO of a large national clothing chain located in Flatrock. As the meet starts, Wizzer takes a seat in the row just behind Berk. During the meet Wizzer overhears Berk discussing an upcoming merger and acquisition with his wife. Based on what he has overheard, Wizzer purchases a large number of shares in Berk's company the next day. Several weeks later a merger is announced and Wizzer sells his stock profiting over 2 million dollars. Which of the following statements is true? a. Wizzer is liable as a "tippee".

b. Wizzer is not liable because he is not a "tippce".

c. Wizzer is liable as a "tipper".

d. Wizzer is not liable but Berk is because he was careless in talking about the confidential information in a public place.

11.All of the following are elements of a security except:

a. the hope that profits will be made primarily by the efforts of the investor.

b. the investment of money

c. a common enterprise

d. the expectation that profits will be made by the efforts of people other than the investor.

12.Section IO(b) prohibits fraud in connection with the purchase or sale of any security. Which of the following is NOT required by the courts in order to find a violation of 10(b)?

a.Plaintiff relied on the misstatement or omission.

b. Defendant was negligent.

c. Information was material

d. Defendant had Scienter

13.Prairie Land Corp. needs to raise $25 million. They wish to avoid having to go through the full registration process under the 1933 Act. They will need to advertise, sell to accredited and unaccredited investors, the stock will be unrestricted and they plan to provide an offering circular containing a certified balance sheet to investors. What exemption will work best for Prairie Land?

a. Regulation A Tier 2

b. Regulation D Rule 506

c. Rule 147 Intrastate Offering

d. Regulation D Rule 505

14.Under the new SEC Rules regarding crowdfunding, which of the following individuals would be permitted to invest $3,000 in a start-up venture offered through a frnding portal registered with the SEC?

a. Beginning engineer making $60,000 per year, with a net worth in excess of his/her

annual income.

b. Beginning Attorney with a net worth of $40,000 making $58,000 per year.

c. Grocery clerk making $35,000 per year with a net worth of $50,000.

d. CPA making $50,000 per year with a net worth of $55,000.