Securities Exchange Act of 1934

Which of the following issuers must report to the SEC under the Securities Exchange Act of 1934? I. Corporations II. Investment Companies III. Municipalities IV. Federal Agencies a.) I and II b.) II and III c.) I, II, III d.) I, II, III, IV

a.) I and II.

The "penny stock rule" applies to customer purchases of securities that are not exchange listed which are priced below: a.) $10 per share b.) $5 per share c.) $2 per share d.) $1 per share

b.) $5 per share.

Under Registration M, the maximum restricted period for trading a subject security by a syndicate member that is NOT a market maker is: a.) 1 day b.) 5 days c.) 10 days d.) 20 days

b.) 5 days.

Fines assessed for convictions involving violations of insider trading laws are paid to the: a.) Internal revenue service b.) Department of treasury c.) Securities and Exchange commission d.) Department of justice

b.) Department of treasury.

Which of the following usually acts as the stabilizing market maker? a.) Issuer b.) Managing underwriter c.) Any member of the syndicate d.) Any member of the selling group

b.) Managing underwriter.

Issuers that wish to give "earnings guidance" to research analysts must conform with the provisions of the SEC: a.) Regulation SB b.) Regulation FD c.) Regulation SK d.) Regulation SP

b.) Regulation FD.

SEC rule 10b-18 allows an issuer to buy its shares in the open market: a.) at any price that is reasonably related to the current market b.) at the highest independent bid or the last report sale price, whichever is higher c.) at the lowest independent offer or the last report sale price, whichever is lower d.) under no circumstances, since this is considered to be market manipulation

b.) at the highest independent bid or the last report sale price, whichever is higher.

SEC Rule 10b-5-1: a.) is the "catch all" fraud rule that makes any deceptive or manipulative practice in connection with the sale of a securities potentially fraudulent under the securities exchange act of 1934 b.) gives officers of publicly held companies a safe harbor from being charged with an insider trading violation if they establish a pre-arranged trading plan for that issuer's securities c.) prohibits the purchase or sale of an issuer's securities based on material nonpublic information in breach of duty of trust owned to the issuer or shareholders of that securities d.) prohibits any person, in connection with a tender offer for securities, to bid for or purchase the security which is subject of the tender offer through any means other than via the offer

b.) gives officers of publicly held companies a safe harbor from being charged with an insider trading violation if they establish a pre-arranged trading plan for that issuer's securities.

A broker-dealer may hold fully paid customer securities: a.) when authorized in writing by the customer b.) if the securities are segregated and held in safekeeping c.) if the firm notifies the customer every 3 months as to the amount of securities and the fact that they are "not segregated" d.) only if the customer is traveling

b.) if the securities are segregated and held in safekeeping.

All of the following are covered under the Securities Exchange Act of 1934 EXCEPT: a.) registration of broker-dealers b.) registration of new issues c.) stabilization of new issues d.) registration of exchanges

b.) registration of new issues.

SEC Regulation FD covers: a.) Notification to customers of a member firm's privacy policies and practices b.) selective disclosure of material non-public information by issuers c.) standardization of disclosure of financial and non-financial information by issuers d.) registration filings with the SEC by small business issuers

b.) selective disclosure of material non-public information by issuers.

A short seller is prohibited from covering short sales with offered securities purchased from an underwriter participating in the offering if the short sale occurred how many days prior to the pricing of the offered securities? a.) 1 b.) 2 c.) 5 d.) 10

c.) 5.

The Chairman of XYZ corporation, while play golf with a neighbor, casually mentions that this quarter's earnings are likely to be lower than expected. Based on this information, the neighbor sells short XYZ stock the next day. Which statement is TRUE? a.) Only the chairman has violated insider trading rules b.) Only the neighbor has violated insider trading rules c.) Both the neighbor and the chairman have violated insider trading rules d.) neither the chairman nor the neighbor has violated insider trading rules

c.) Both the neighbor and the chairman have violated insider trading rules.

Which of the following is (are) considered to be "insiders"? I. ABC Corporation's President II. The Spouse of ABC Corporation's President III. The in-house counsel of ABC corporation IV. An investor holding non-convertible senior ABC securities a.) I only b.) I and II c.) I, II, III d.) II, III, IV

c.) I, II, III.

During a tender offer, which of the following activities are prohibited? I. purchase the stock in a cash account and tender 2 business days after the trade date II. purchase a call option in a cash account and tender 2 business days after the trade date III. tender shares held in an arbitrage account where the position is "short against the box" IV. exercise a call option held in a cash account and issue irrevocable instructions to deliver the acquired shares a.) I and III b.) I and IV c.) II and III d.) II and IV

c.) II and III.

The provisions of the Securities Exchange Act of 1934 apply to all of the following activities EXCEPT: a.) trading of corporate bonds b.) trading of municipal bonds c.) issuance of municipal bonds d.) issuance of corporate financial statements

c.) issuance of municipal bonds.

Pre-arranged trades by insiders are: a.) prohibited b.) permitted under Rule 10b-5 c.) permitted under Rule 10b-5-1 d.) permitted under Regulation FD

c.) permitted under Rule 10b-5-1.

Broker-dealers are required to report their computed net capital to customers: a.) monthly b.) quarterly c.) semi-annually d.) annually

c.) semi-annually.

All of the following meeting the statutory definition of an "insider" EXCEPT: a.) an officer of a company b.) the holder of 10% of the equities securities of a company c.) the holder of 10% of the debt of a company d.) the director of a company

c.) the holder of 10% of the debt of a company.

A customer inherits 3,000,000 shares of ABC stock, a company listed on the NYSE which has 10,000,000 shares outstanding. The customer is not a director or officer of the company. Which of the following statements is (are) TRUE? I. The customer is defined as an "insider" under the Securities Exchange Act of 1934 II. The customer is prohibited from selling ABC stock short; however, the customer may short against the box at year end, as long as the position is covered within 20 days III. If the customer trades ABC stock at a profit after having held the stock for less than 6 months, the gain is forfeited IV. The customer must report trading activity to the SEC a.) I only b.) II and IV c.) I, II, IV d.) I, II, III, IV

d.) I, II, III, IV.

The anti-fraud provisions of the Securities Exchange Act of 1934 apply to: I. Individuals trading exempt securities II. Individuals trading non-exempt securities III. Broker-dealer firms trading exempt securities IV. Broker-dealer firms trading non-exempt securities a.) II and IV b. I and II c.) III and IV d.) I, II, III, IV

d.) I, II, III, IV.

Which of the following requires filing with the SEC? I. Purchase of a 5% position in one company's stock II. An officer selling 1% of that company's stock III. Broker-dealer net capital computation IV. Corporate proxy materials a.) I only b.) II only c.) I, II, IV d.) I, II, III, IV

d.) I, II, III, IV.

Which statements are TRUE about the "penny stock rule"? I. Before confirmation of a trade in a "penny stock" can be made with a new customer, a suitability determination must be completed, signed and returned II. Suitability statements are required for new customers who wish to purchase OTC equities securities valued at under $5 that are not included on NASDAQ III. Suitability statements are not required for customer purchases of NASDAQ listed and exchange listed securities IV. Suitability statements are not required for customers who have either had cash or securities in custody of that firm for at least 1 year; or for customers who have bought 3 or more "penny stock" issues previously from that firm a.) I and II only b.) III and IV only c.) II, III and IV only d.) I, II, III, IV

d.) I, II, III, IV.

Under Regulation M, Tier 1 securities are those with a minimum: I. daily trading volume of $100,000 II. daily trading volume of $1,000,000 III. market float of $25,000,000 IV. market float of $150,000,000 a.) I and III b.) I and IV c.) II and III d.) II and IV

d.) II and IV.

Under Regulation M, which statement is TRUE regarding stabilizing bids entered by market makers? a.) Stabilizing bids can only be maintained for 5 consecutive business days b.) Stabilizing bids can only be maintained for 30 calendar days c.) Stabilizing bids can only be maintained for 45 calendar days d.) There is no time limitation on the period that a stabilizing bid can be maintained

d.) There is no time limitation on the period that a stabilizing bid can be maintained.