Defintions under USA. What is a security,

Which of the following is NOT a security? A)A variable life policy. B)A voting trust certificate. C)An American depository receipt (ADR). D)An endowment contract.

D)An endowment contract. An endowment contract is not a security; it is an insurance product. All the other choices are securities.

Which of the following is NOT classed as a security under the Uniform Securities Act? A)Options on stocks. B)Stocks. C)Heating oil futures D)Bonds issued by a foreign country.

C)Heating oil futures Commodity futures on items such as gold, silver, wheat, heating oil, and pork bellies are not securities. Options on stocks, and stocks and bonds are securities.​

Which of the following is NOT included in the definition of a security in the Uniform Securities Act (USA)? A)A $100,000 whole life insurance policy. B)A variable annuity. C)Commercial paper issued with an 8-month maturity. D)A preorganization certificate.

A)A $100,000 whole life insurance policy. Life insurance and fixed annuities are not listed as securities under the USA, while their variable counterparts are. It is best to concentrate on learning the few things that are not securities.

Which of the following would be considered a security under the provisions of the USA? A)A certificate of interest in a real estate limited partnership offering. B)A fixed annuity contract issued by a life insurance company not authorized to do business in the state. C)An endowment contract issued by a life insurance company licensed to do business in the state. D)Gold bullion.

A)A certificate of interest in a real estate limited partnership offering. It is always best to remember what is not a security than try to remember all of the things that are. All insurance contracts, other than variable ones, are not securities. Commodities, including precious metals, are not securities.

Which of the following is NOT a person as defined by the Uniform Securities Act? A)A child prodigy for whom his mother, as custodian, opened an account at a major securities firm. B)A small unincorporated investment club. C)Guelph, a small city outside of Toronto, Ontario, that maintains an investment account at a brokerage house to invest surplus funds. D)XYZ Dry Cleaners, Inc., whose shareholders all work on the premises and also offer financial advice to customers who request it.

A)A child prodigy for whom his mother, as custodian, opened an account at a major securities firm. Under the Uniform Securities Act, the term "person" has a specific meaning. "Person" refers to an individual, corporation, association, joint-stock company, trust, unincorporated organization, government, or political subdivision of a government. A minor child, is not a person legally capable of entering into contracts. Adults must open custodial accounts on behalf of minor children.

Under the USA, which of the following is NOT a security? A)A condominium purchased as a primary residence B)Limited partnership in a cattle-breeding program C)Commercial paper with less than 270 days to maturity D)Treasury stock

A)A condominium purchased as a primary residence A personal residence, whether a condominium or other single family home, is real estate, not a security.

Which of the following would not be an issuer? A)A corporation selling certificates of interest in a mining lease. B)A partnership selling partnership interests. C)An investment company. D)A governmental agency borrowing money for short-term needs

A)A corporation selling certificates of interest in a mining lease. Although the corporation issuing its own stocks and/or bonds would be an issuer, under the Uniform Securities Act, selling certificates of interest in mining leases or similar items does not make one an issuer. Even though the choice does not indicate how the governmental agency is borrowing, we can assume they are issuing a short-term note.

What is the official designation of the person or agency that enforces the USA in each state? A)Administrator. B)Registrar. C)Issuer. D)Transfer agent.

A)Administrator. The USA specifies that a state's securities Administrator has the authority to enforce the act in that state. A transfer agent is the person or corporation responsible for recording the names and holdings of registered security owners.

Which of the following statements are TRUE? The Uniform Securities Act is not the actual law of any state or territory of the United States. The National Securities Markets Improvement Act of 1996 requires states and the federal government to have identical registration requirements. The state securities Administrator has responsibility for the enforcement and administration of a state's securities law. A)I and III. B)II and III. C)I, II and III. D)I and II.

A)I and III. The Uniform Securities Act is not the actual law of any state or territory. Rather, it is model legislation that states use as a guide in drafting their own securities laws. Those laws give the responsibility to the state Administrator for enforcement and administration of those laws. The NSMIA's purpose is to eliminate dual registration, not to require identical laws.

Which of the following are nonissuer transactions? An investment manager purchases 100,000 shares of XYZ on the NYSE. An investment adviser sells a block of YYY Corp. shares to an overseas investor in a private transaction. The president of Dot.com, Inc., sells his personal shares of Dot.com on the NYSE. Dot.com purchases its own shares on the open market in order to place them in treasury. A)I, II, III and IV. B)III and IV. C)I only. D)I and II.

A)I, II, III and IV. A nonissuer transaction is a transaction in which the proceeds do not directly or indirectly go to the issuer as in a secondary transaction. When the investment manager purchases XYZ shares on the NYSE, the proceeds of the sale do not go to XYZ Corp., but to the investors who sold the stock. When an investment adviser sells YYY Corp. shares to an overseas private investment group, YYY Corp. does not benefit directly or indirectly because the proceeds go to the investment adviser, not to YYY Corp. When Dot.com purchases its own shares on the open market, the proceeds go to outside investors, not to Dot.com as the purchaser. However, if Dot.com resold its shares, the transaction would be an issuer transaction.

Which of the following are issuers of securities? ABC Manufacturing Corporation borrows in the capital markets by selling bonds every few months. Dot.Com, Inc., in an initial public offering, sells all its securities to the public within a few minutes after the shares go public. XYZ Corp., in an initial public offering, fails to sell any shares to the public because it is not an attractive investment. YYY Corp., with 1 million shares outstanding, sells additional shares to the public in a primary offering. A)I, II, III and IV. B)I, II and IV. C)III and IV. D)I only.

A)I, II, III and IV. ABC Manufacturing Corp. is an issuer raising debt capital whereas Dot.Com, Inc., is an issuer raising equity capital. YYY Corp. is an issuer raising equity capital by selling additional new shares in a public primary offering. XYZ Corp. is an issuer despite its failure to sell any shares. The USA defines an issuer as a person that issues or proposes to issue a security. It is not necessary that an issuer actually issue the shares it proposes to issue.

Which of the following are defined as securities under the Uniform Securities Act? Real estate investment trust certificates. Preorganization subscription agreements. Shares of treasury stock. Voting-trust certificates issued by a corporation undergoing a reorganization. A)I, II, III and IV. B)I and IV. C)I, II and III. D)I only.

A)I, II, III and IV. All of the choices listed are defined as securities under state law. We believe the best thing for you to do is remember those few things that are not securities.

Which of the following financial instruments are considered securities under the USA? Collateral trust certificates. Investment contracts, including interests in oil and gas drilling partnerships. Options listed on the Chicago Board of Options Exchange. Foreign currency options contracts traded on the Philadelphia Stock Exchange. A)I, II, III and IV. B)I and II. C)II and III. D)II, III and IV.

A)I, II, III and IV. Collateral trust certificates, investment contracts, options, and option contracts, regardless of the underlying asset, are identified as securities in the Uniform Securities Act and are subject to its provisions. Currencies are not securities, but options on currencies are.

Which of the following are defined as securities under the Uniform Securities Act? An investment in a managed pool of rental condominiums. Unsecured debentures sold in a private placement only to accredited investors. Bills, notes, and bonds issued by the U.S. Treasury. A Roth IRA. A)I, II, and III. B)II and IV. C)I and III. D)I and II.

A)I, II, and III. An investment into an individual condominium used as a residence is not a security. However, an interest in the rental income from a group of condos, where the rent is pooled, is a security under the USA. While the sale of the debentures in this case is an exempt transaction, the debentures are securities. Treasury bills, notes, and bonds are securities, although they are exempt from registration under the USA. A Roth IRA is not a security. Securities may be put in an IRA, but the IRA is not a security. The key to questions like this is to remember those things that are not securities.

Which of the following would be a nonissuer transaction? XYZ Corporation sells 100,000 shares of previously issued common stock out of its treasury. GEMCO Mutual Fund sells 100,000 shares of XYZ Corporation common stock out of its portfolio. Curt sells 1,000 shares of Giggle common stock to Chuck in an isolated transaction. Dave reinvests his dividend into additional shares of GEMCO Mutual Fund. A)II and III. B)III and IV. C)I and II. D)I and IV.

A)II and III. In a nonissuer transaction, the proceeds of the sale go to someone other than the issuer. When a mutual fund liquidates a holding in its portfolio, the fund receives the proceeds, not the issuer. One individual selling his stock to another is the classic example of an isolated nonissuer transaction. A corporation selling stock out of its treasury receives the money from the sale, and dividend reinvestment purchases shares directly from the mutual fund.

All of the following are nonissuer transactions EXCEPT A)Intel sold 10 million shares of its preferred stock in a private placement transaction to a syndicate of five pension funds B)broker-dealer A sold 5,000 shares of Dell Computer from inventory to broker-dealer B C)Joe Smith sold 100 shares of Apple Computer to his neighbor, Kevin Jones, in a private transaction D)Monster Insurance Company sold 10,000 shares of IBM to KLM Investment Bankers, Inc., through INSTINET

A)Intel sold 10 million shares of its preferred stock in a private placement transaction to a syndicate of five pension funds When an issuer sells its own securities, it is an issuer transaction. When someone other than the issuer sells securities, it is a nonissuer transaction.

The term "security" includes all of the following EXCEPT a A)Keogh plan invested exclusively in mutual funds B)promissory note C)right or warrant to subscribe to any security D)debenture

A)Keogh plan invested exclusively in mutual funds A Keogh plan, or any other retirement plan, is not defined as a security under the USA. A right or warrant, promissory note, and debentures are defined as securities.

Under the USA, the definition of "issuer" includes a(n): A)person proposing to issue a security. B)specialist on the floor of an exchange. C)officer or director of a company traded at the NYSE. D)market maker for publicly traded securities.

A)person proposing to issue a security. An issuer is any person who issues or proposes to issue any security for sale to the public. Stock exchange specialists, company directors, and market makers do not issue securities and therefore are not issuers.

Which of the following is NOT a security? A)Commercial paper with a 6-month maturity. B)A $1,000,000 whole life insurance policy. C)An interest in a real estate condominium sold with a rental pool. D)A variable annuity.

B)A $1,000,000 whole life insurance policy Under the Uniform Securities Act, whole life insurance policies are not securities. Condominiums used as a personal residence are not securities, but when a rental pool arrangement exists, third-party management seeking profit for the investor exists, which meets the Howey definition of an investment contract. .

Which of the following is defined as a security under the Uniform Securities Act? A)A guaranteed, lump-sum payment to a beneficiary. B)An investment contract. C)Commodity futures contracts. D)Fixed, guaranteed payments made for life or for a specified period.

B)An investment contract. As a result of the Howey decision, investment contracts are defined as (and often serve as a synonym for) a security under the Uniform Securities Act. A guaranteed, lump-sum payment to a beneficiary is an endowment policy excluded from the definition of a security. Fixed, guaranteed payments made for life or for a specified period are fixed annuity contracts not defined as securities. Commodity futures contracts and the commodities themselves are not securities.

As defined in the Uniform Securities Act, which of the following is NOT a security? A)Interest in a merchandising marketing program B)Annuity providing a fixed monthly payout C)Options on a federal covered security D)Common stock of ABC National Bank that is a member of the Federal Reserve System

B)Annuity providing a fixed monthly payout Variable annuities are securities while fixed annuities are not. Options contracts, interests in merchandising marketing programs, and common stock are securities under the USA.

Under the USA, which of the following are securities? Commodity option contract. Treasury stock. Keogh plan. A)II and III. B)I and II. C)I and III. D)I, II and III.

B)I and II. A commodity option contract and treasury stock are securities under the USA. A commodity option contract is a security, while a commodity futures contract is not. A Keogh plan is a vehicle for an investment, but it is not a security in and of itself.

As defined in the Uniform Securities Act, the term "security" would include: debentures. Keogh plans. A preorganization certificate. whole life insurance policies that pay dividends to their policyholders. A)II and IV. B)I and III. C)I and IV. D)II and III.

B)I and III. It is always easier to remember the things that are not a security-retirement plans, nonvariable insurance policies, collectibles, commodities, condominiums, and currencies.

Under the Uniform Securities Act, an issuer is any person who issues or proposes to issue a security for sale to the public. According to the USA, which of the following is NOT an issuer? The city of Chicago, which is involved in a distribution of tax-exempt highway improvement bonds. AAA Partnership issues certificates of interest or participation in its oil, gas, and mining titles. The AAA Manufacturing Company, which proposes to offer shares to the public but has not completed the offering. The United States government, which proposes to offer Treasury bonds. A)I only. B)II only. C)I, II and IV. D)I, II and III.

B)II only. Under the Uniform Securities Act, an issuer is any person who issues or proposes to issue a security. However, with respect to certificates of interest or participation in oil, gas, or mining titles or leases, there is not considered to be any issuer even though those certificates are included in the definition of "security." Examples of issuers are a municipality such as the city of Chicago, which issues tax-exempt highway improvement bonds; the AAA Manufacturing Company, which proposes to offer shares to the public even though it has not completed the offering; and the United States government, when it proposes to offer Treasury bonds.

A primary issue is: A)a sale between investors of securities traded on the New York Stock Exchange. B)a new offering of an issuer sold to investors. C)a secondary market transaction in a security recently offered to the public. D)the first transaction between two parties in the over-the-counter market.

B)a new offering of an issuer sold to investors. A primary issue is a new offering of securities by an issuer sold to investors. Transactions between two investors in the over-the-counter market refer to secondary transactions (the market between investors). A sale between investors of securities traded on the New York Stock Exchange is another example of a secondary transaction.

Under the Uniform Securities Act, the term "nonissuer" refers to: A)a corporation. B)a person other than the issuer. C)an investment adviser. D)an agent.

B)a person other than the issuer. Under the Uniform Securities Act, a nonissuer is any person (as defined under the act) that is not the issuer of the security. This would include an individual investor or a securities dealer selling from inventory.

In the Howey decision, the U.S. Supreme Court held that a security must represent: A)debt in a publicly traded corporation whose managers are engaged in commercial activity. B)an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others. C)personal interest in a business. D)an investment of money in a common enterprise with the expectation of profit from the efforts of the investor.

B)an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others. In the Howey decision, the U.S. Supreme Court held that a security must represent an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others.

In the Howey decision, the U.S. Supreme Court held that a security must represent: A)interest in a publicly traded corporation whose managers are engaged in a regulated business enterprise. B)an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others. C)an investment of money in a common enterprise with the expectation of profit and/or tax deductible losses from the managerial efforts of others. D)an investment of money in a common enterprise with the expectation of profit from the efforts of the investor.

B)an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others. The Howey decision defined a security as an investment of money, in a common enterprise, where there is an expectation of a profit, and through the efforts of a third party and not the investor.

According to the Uniform Securities Act, each of the following is a security EXCEPT a(n): A)limited partnership in an oil and gas exploration program. B)contract in soybean futures. C)U.S. Treasury bill. D)interest in a condominium project with a rental pool.

B)contract in soybean futures. Interests in a condominium complex that has a rental pool feature, U.S. Treasury bills, and limited partnership interests in oil and gas exploration programs are securities under the USA. The USA excludes certain financial instruments from the term "security" such as term and whole insurance policies, commodity futures contracts, and collectibles.

A securities transaction where there is no benefit to the issuer is called a(n): A)nonprofit transaction. B)nonissuer transaction. C)primary transaction. D)issuer transaction.

B)nonissuer transaction. In a nonissuer transaction, the proceeds do not benefit or go to the issuer directly. In a primary transaction, the proceeds of an underwriting go to the issuing corporation directly.

If a broker-dealer purchases 100,000 shares of common stock from an individual investor, this is a: A)private placement. B)nonissuer transaction. C)prohibited transaction. D)local transaction.

B)nonissuer transaction. In a nonissuer transaction, the proceeds of the trade do not benefit or go to the issuer.

A discussion referring to blue-sky laws would include all of the following EXCEPT: A)forms requiring issuers selling securities in the state to comply with state securities laws. B)the Securities Act of 1933 and Securities Exchange Act of 1934. C)a state securities law that grants state securities Administrators the power to deny or revoke a broker-dealer's or an agent's registration within its state. D)state laws that are designed to protect the public against fraud in securities sales within a state.

B)the Securities Act of 1933 and Securities Exchange Act of 1934. Blue-sky laws are state securities laws. The Securities Act of 1933 and the Securities Exchange Act of 1934 are federal securities laws.

Which of the following would be considered a nonissuer transaction as defined in the Uniform Securities Act? Gates Williams, the largest shareholder in Maxihard Corporation, sells 100,000 shares in a registered secondary transaction. Buffy Warren, the largest shareholder in Barkshire Mathaway, purchases an additional 50,000 shares on the NYSE. In its capacity as a market maker, XYZ Securities sells 200 shares of Gemco common stock to the corporate treasurer of Gemco, buying for the company's investment account. Gemco, traded on the Nasdaq Stock Market, sells 5,000 shares of its stock to XYZ Securities, a registered market maker in Gemco stock. The stock was donated to Gemco by a former officer of the firm. A)I and II. B)II and III. C)I, II and III. D)III and IV.

C)I, II and III. A nonissuer transaction is one in which the issuer does not receive the proceeds of the sale. When a stockholder sells his shares, he is the one who receives the money, not the issuer. Purchases are never considered issuer transactions because the money is going out, not coming in. When an issuer sells shares, whether in a primary or secondary transaction (as is the case with the donated shares), if it receives the proceeds, it is an issuer transaction.

As defined in the Uniform Securities Act, the term person would include: a limited partnership. a political subdivision. an unincorporated association. the executor of an estate for a deceased individual. A)I, II and III. B)II and III. C)I, II, III and IV. D)I and IV.

C)I, II, III and IV. All of these would be included in the USA's definition of person. Not included are a minor, a deceased person, or someone judged mentally incompetent.

Which of the following is responsible for the administration of the USA in a state? A)Securities and Exchange Commission. B)State judiciary system. C)The Administrator. D)Executive department.

C)The Administrator. On this exam, the chief state regulator is the Administrator. The Securities and Exchange Commission is the federal agency, not state agency, that oversees and regulates securities on a national level.

If a public customer plans to purchase stock in a company that has been listed on a stock exchange for the past year in a regular way secondary transaction, when must the customer receive the prospectus? A)Before the order entry. B)Before the settlement date. C)There are no prospectus delivery requirements for this transaction. D)No later than three days from the settlement date.

C)There are no prospectus delivery requirements for this transaction. Because this is a secondary market transaction in a listed stock, there is no requirement that a prospectus be delivered to the customer.

Which of the following would NOT be included in the definition of a security under the Uniform Securities Act? A)Preferred stock in the Colonel Corn Processing Corporation. B)Debentures issued by the XYZ Retirement Planning Company. C)Whole life insurance policies issued by the Dividend Mutual Life Insurance Association of America. D)Common stock in the Shining Silver Mining Company.

C)Whole life insurance policies issued by the Dividend Mutual Life Insurance Association of America. Nonvariable contracts issued by insurance companies are not securities.

All of the following are securities under the Uniform Securities Act EXCEPT: A)a right or warrant. B)a variable annuity. C)a commodities futures contract. D)common stock.

C)a commodities futures contract. Futures contracts on commodities are investment vehicles but are not defined as securities under the act. Common stock, rights, and warrants are included in the definition of a security under the USA, and variable annuities are securities because the investment risk of these contracts falls on the contract owner.

In the Howey decision, the U.S. Supreme Court held that a security must represent: A)an investment of money in a common enterprise with the expectation of profit or tax deductible losses from the managerial efforts of others. B)an interest in a publicly traded corporation whose managers are engaged in a regulated business enterprise. C)an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others. D)an investment of money in a common enterprise with the expectation of profit from the efforts of the investor.

C)an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others. The Howey decision defined a security as (1) an investment of money (2) in a common enterprise (3) where there is an expectation of a profit (4) through the efforts of a third party and not the investor.

Under the USA, the term "security" refers to all of the following EXCEPT: A)put, call, straddle, or option. B)bonds. C)commodity futures contract. D)certificate of deposit for a security.

C)commodity futures contract. Commodities and futures contracts on commodities are not securities. Just remember the short list of items that are not securities.

Under the Uniform Securities Act (USA), a person is best defined as a(n): A)human being. B)adult human being. C)individual or entity considered able to enter into an enforceable contract. D)party that is subject to federal income tax.

C)individual or entity considered able to enter into an enforceable contract. According to the Uniform Securities Act (USA), a person is a competent adult individual or an entity that is able to enter into an enforceable contract. For example, the American Red Cross is a person (legal entity), although as a charitable organization, it is not subject to federal income tax.

It would not be a prohibited practice under the Uniform Securities Act for an agent to tell a client that: A)my commissions are structured so I make money only if the client makes money. B)the fact that she passed her licensing exams is ample proof of her qualifications. C)registered nonexempt securities may properly be sold in the state. D)registration of securities implies tacit approval of the Administrator.

C)registered nonexempt securities may properly be sold in the state. Nonexempt securities are those that must register. The Administrator never approves of any security, passing a licensing exam does not give one the right to assert one's qualifications, and performance-based compensation is never permitted for agents.

Blue-sky laws pertain to all of the following EXCEPT the: A)registration of securities salespeople in a state. B)registration of securities within a state. C)regulation of securities trading in other countries. D)regulation of securities transactions in a state.

C)regulation of securities trading in other countries. Blue-sky (Uniform Securities Act) laws refer to state securities regulation in the state. Blue-sky laws require new securities to be registered with the state and regulate trading of securities in a state.

Under the Uniform Securities Act, which of the following is NOT defined as a security? A)Limited partnership unit. B)Preorganization certificate. C)Listed stock option. D)Fixed annuity.

D)Fixed annuity. A fixed annuity is an insurance contract and is not considered a security under the USA. Options on stock, (listed or not), interests in limited partnerships, and preorganization certificates are all defined as securities under the USA.

Which of the following would meet the USA's definition of "person"? An individual. An unincorporated association. A political subdivision. A)II and III. B)I and III. C)I and II. D)I, II and III.

D)I, II and III. The USA's definition of person is extremely broad. Just remember the three non-persons: minors, those who are deceased, and those declared mentally incompetent.

Which of the following are securities under the Uniform Securities Act? A variable annuity. A subscription right to purchase common stock. A condominium purchased solely as a place of residence. Certificate of interest or participation in an oil, gas, or mining partnership. A)I, III and IV. B)II, III and IV. C)I, II, III and IV. D)I, II and IV.

D)I, II and IV. Securities include stocks, bonds, notes, certificates of interest in any profit-sharing agreement or participation plan (oil, gas, mining, lease, or real estate partnerships), preorganization certificates or subscription agreements, certificates of deposit for a security, evidence of indebtedness, warrants, rights, or options, variable annuities, commodity options, and multi-level distributorships. Excluded from the definition are insurance contracts, endowments with fixed benefits, fixed annuities, Keogh or IRA plans, written confirmations of a trade, futures contracts, real estate held as a personal residence, currencies, precious metals, and collectibles.

Under the USA, the definition of person includes which of the following? An unincorporated investment club. An individual who buys and sells securities only for his own account. Associations and partnerships whether or not they issue certificates. The U.S. government. A)III and IV. B)II and III. C)I and II. D)I, II, III and IV.

D)I, II, III and IV. An unincorporated investment club, an individual who buys and sells securities for his own account, associations, and partnerships (whether or not they issue certificates), and the U.S. government are specifically listed as persons in the act. On the exam, minor children, deceased individuals, and mentally incompetent individuals are the only choices that are not persons under the act.

An interest in which of the following is a security under the Uniform Securities Act? Merchandising marketing scheme. Multilevel distributorship arrangement. Oil and gas drilling program. Cattle feeding program. A)II and III. B)I only. C)III only. D)I, II, III and IV.

D)I, II, III and IV. The USA considers interests in merchandising marketing schemes, multilevel distributorship arrangements, oil and gas drilling programs, and farm animals, whether it is a feeding or a breeding program, to be investment contracts and, therefore, securities. The best strategy is to memorize the short list of things that are not securities rather than try to remember all of the things that are.

Under the Uniform Securities Act, the term person would include: a minor who has a valid U.S. passport. a political subdivision. an unincorporated association. an inter vivos trust. A)II and III. B)I and II. C)III and IV. D)II, III and IV.

D)II, III and IV. The term person has an extremely broad definition. It is best to remember the three things that are not persons: minors, individuals who have been judged incompetent, and deceased individuals.

Which of the following best describes a nonissuer transaction? A)One that involves investors in the primary market. B)One that is generally prohibited under the USA. C)One that provides capital to a corporation that is offering stocks or bonds to the public. D)One that occurs between investors in the secondary market.

D)One that occurs between investors in the secondary market. In a nonissuer transaction, none of the proceeds go to the issuer, and the most common nonissuer transaction occurs between investors in the secondary market. An issuer transaction provides capital to issuers.

Which of the following is an example of a nonissuer transaction? A)Primary issue of corporate stock. B)Preemptive rights offering. C)Private placement by an issuer. D)Secondary offering by an institutional seller.

D)Secondary offering by an institutional seller. Investors or shareholders routinely receive the proceeds from a secondary transaction. About the only time a secondary offering is an issuer transaction is if the issuer were reselling treasury stock since the proceeds go to the issuer.

oan owns and operates a jewelry store, and she has contracted to purchase 5,000 Swiss watches, paying the watch manufacturer in Swiss francs three months from the date of contract. To protect (hedge) her currency risk, she purchases call options on Swiss francs. Which of the following statements best describes her transaction in the Swiss franc calls in light of the USA? A)She has engaged in a prohibited transaction because American investors are generally prohibited from trading in foreign currencies under the USA. B)She has not engaged in a securities transaction because she purchased the options to hedge a business risk. C)She has not engaged in a securities transaction because options on foreign currencies are not considered to be securities under the USA. D)She has engaged in a securities transaction because options on foreign currencies are considered to be securities under the USA.

D)She has engaged in a securities transaction because options on foreign currencies are considered to be securities under the USA. Options, regardless of the underlying asset, are considered securities under the USA. Therefore, Joan engaged in a securities transaction by purchasing call options on the Swiss franc. While there is no prohibition against American investors trading in foreign currency options or futures under the USA, acquiring the currency itself, rather than the option, would not have involved a securities transaction; currency is not a security.

In which of the following instances would an investment adviser representative be exempt from the anti-fraud rules of the Uniform Securities Act? A)Since the IAR understands how nervous a particular client is, he never admits a loss in the account to that client. B)In an effort to avoid possible conflicts of interest, the IAR only does personal trades through an account set up with a fictitious name. C)The IAR is also an agent of a broker-dealer and, in that capacity, makes a recommendation to a nonadvisory client. D)The IAR makes a presentation at a seminar where the only topic discussed is fixed annuities.

D)The IAR makes a presentation at a seminar where the only topic discussed is fixed annuities. Since fixed annuities are not securities, a presentation dealing solely with that topic is not covered under the anti-fraud statutes of the USA.

The Securities Act of 1933 covers all of the following EXCEPT A)liabilities for misleading filings B)full and fair disclosure C)prospectus requirements D)blue-sky laws

D)blue-sky laws The purpose of the Securities Act of 1933 is to provide investors with full disclosure about a new securities issue. The act is federal in scope, whereas blue-sky laws refer to state securities regulations.

The USA defines all of the following as securities EXCEPT A)unlisted options B)common stock C)fixed premium variable life insurance policies D)term life insurance

D)term life insurance Term life insurance is an insurance contract, not a security. Remember the short list of those items which are not securities.