Unit 4 - 65

Each of the following persons is able to issue securities EXCEPT A) an individual B) a partnership C) a credit union D) a corporation

A) an individual

Fearing loss of a potential sale, an agent omits facts that a prudent investor requires to make informed decisions. Under the Uniform Securities Act, this action is A) fraudulent for both exempt and nonexempt securities B) not fraudulent if there was willful intent to omit the information C) fraudulent for exempt securities only D) fraudulent for nonexempt securities only

A) fraudulent for both exempt and nonexempt securities

An agent can sell an unregistered security to one of the firm's retail customers under each of the following circumstances EXCEPT A) if the agent is not registered in the client's state B) if the security being purchased is an exempt security C) if the transaction is initiated at the request of the customer D) if the security being purchased is a warrant to purchase stock that is NYSE listed

A) if the agent is not registered in the client's state

All of the following must be specified in the state registration statement of the security except A) the total amount of the security that will be offered in this state B) the total amount of the security that will be offered in each state C) all other states where the security is currently registered or will be registered D) a stop order from any other state that affects the offering of the security within that state

B) the total amount of the security that will be offered in each state

Which of the following can issue stock? A) A state B) A city C) A corporation D) The U.S. Treasury

C) A corporation

Which of the following is NOT an accredited investor? A) Any organization not formed for the purpose of purchasing securities with a net worth in excess of $5 million. B) A registered open-end investment company with net assets of $600,000. C) An individual with a net worth, including the value of her primary residence, that is greater than $1 million. D) An individual whose income was greater than $200,000 in each of the 2 most recent years with a reasonable expectation of reaching that level again this year.

C) An individual with a net worth, including the value of her primary residence, that is greater than $1 million.

The Uniform Securities Act would consider which of the following insurance products to be a security? A) Fixed annuity B) Modified endowment life insurance C) Variable life insurance D) Mortgage life insurance

C) Variable life insurance

A customer requests information on a new mutual fund and asks her agent to circle the important information in the prospectus and information he thinks will be of special interest to her. This is permitted A) if approved by a principal B) without restriction C) under no circumstances D) if accompanied by an unmarked prospectus

C) under no circumstances

The U.S. Supreme Court case resulting in the decision that an investment contract is a security is the A) Golub case B) Howey case C) Steiner case D) Muller case

B) Howey case

The USA defines all of the following as securities EXCEPT A) unlisted stock B) U.S. Treasury bills C) commodity futures D) debentures

C) commodity futures

The primary purpose of the securities registration requirements of the Uniform Securities Act is to ensure that proper disclosure is made available to potential investors. However, not all securities are required to register. Which of the following qualify for an exemption from registration under the act? A) Bonds that are obligations of the People's Republic of North Korea B) Commercial paper with no more than 9 months to maturity that is in 1 of the 3 highest ratings by a nationally recognized rating agency and in a minimum denomination of $10,000 C) Common stock issued by life insurance companies authorized to conduct insurance sales in that state D) Equipment trust certificates issued by railroads whose rates are not subject to regulation by a state or federal agency

C) Common stock issued by life insurance companies authorized to conduct insurance sales in that state

Which of the following statements made by an investment adviser would violate the anti-fraud provisions of the Uniform Securities Act? A) "Our fees are nonnegotiable." (when Form ADV Part 2A clearly indicates otherwise) B) "We require any associated person determining general investment advice to be a CFA." C) "We have over $40 billion in assets under management representing both institutional and retail clients." D) "We believe that fundamental analysis is the best way to select stocks for our clients."

A) "Our fees are nonnegotiable." (when Form ADV Part 2A clearly indicates otherwise)

Which of the following would be considered an issuer transaction as defined in the Uniform Securities Act? A) Barb, the largest shareholder in XYZ Corporation, purchases an additional 50,000 shares on the NYSE. B) Ken, the largest shareholder in ABC Corporation, sells 100,000 shares in a registered secondary transaction. C) GEMCO, traded on the Nasdaq Stock Market, sells 5,000 shares of its stock to LMN Securities Co., a registered market maker in GEMCO stock. The stock was donated to GEMCO by a former officer of the firm. D) In its capacity as a market maker, LMN Securities Co. sells 200 shares of GEMCO common stock to the corporate treasurer of GEMCO, buying for the company's investment account.

C) GEMCO, traded on the Nasdaq Stock Market, sells 5,000 shares of its stock to LMN Securities Co., a registered market maker in GEMCO stock. The stock was donated to GEMCO by a former officer of the firm.