BLAW 3310 FINAL EXAM (MILLER) QUESTIONS AND
ANSWERS
1. Under Regulation D, you can solicit funds for up to and not need
to file a RegistrationStatement before receiving funding: $1,000,000
2. Issuance of new shares of stock by a start-up company is an example of: Equity
Financing
3. Vronsky is an executive at ABC Company. On January 1, 2022, he was given
options byABC allowing him to buy up to 1,000 shares of ABC shares at any
time during 2022 at aprice of $ 30 per share. (On the day he was given these
options, the market price of ABCshares was $20 per share.) On December 1,
2022, the market share price was $ 38, andJohn exercised his option to buy all
1,000 shares on that date. What was his profit?: $8,000
4. blue sky laws: name given to state laws that regulate the otter and sale of securities.
5. stock: A share of ownership in a corporation.
6. bonds: A certificate issued by a government or private company which promises to pay back with interest the
money borrowed from the buyer of the certificate: The city issued bonds to raise money for putting in new sewers.
7. equity financing: when a business obtains funds by issuing ownership shares to investors in the organiza-
tion.
8. Securities and Exchange Commission (SEC): a regulated market where securities, such as
stocks, are traded.
9. SEC disclosure requirements: publicly owned companies to disclose certain types of business and
financial data on a regular basis to the SEC and to the company's stockholders.
10. registration statement: in securities law, the financial information that must be filed with the Securities and
Exchange Commission for review prior to the sale of securities to the public.
11. prospectus: under securities law, a pamphlet that must be produced for distribution to prospective
,12. exemptions from registration: below $ 5.0M in funds solicited over 12 months - in securities law,
provisions that allow certain securities to be sold without meeting the usual registration requirements with the Securities and
Exchange Commission; does not exempt the securities from other aspects of securities laws.
well known seasoned issuers
13. well-known seasoned issuers (WKSI): most securities issued by these
-previously have ottered $1B in debt securities
-or have a public equity market capitalization of at least $700M
-can file a registration the day a new ottering is available
, -can shelf register (k=continually update the prospectus online)
-can sell at any time within the next 3 years
14. Tender offers: an otter open to current stockholders to buy a stock at a certain price; otter may be contingent
upon receiving a certain amount of stock before any purchase is completed or may be an open otter; a method used to
obtain enough stock to control a corporation
15. securities fraud: in securities law, the statutory basis for charging anyone involved in the issuance or trading of
securities with fraud, which is usually due to misleading issuance of information or failure to disclose material
information that causes investors to sutter losses.
16. misstatements: in securities law, liability may be imposed on those responsible for issuing information
about securities that misleads a reasonable investor in investment decisions to her detriment; may be part of fraud.
17. insider trading: the buying or selling of securities of a firm by persons who have information about the firm not
yet available to the public and who expect to make a profit through those transactions.
18. "material nonpublic information" and famous Texas Gulf Sulfur case: they did
release information to the public that could change the stock, insiders bought stock first
19. Investment Company Act: any corporation in business to own and hold the stock of other corporations
20. mutual funds: an investment vehicle regulated by the Investment Company Act, where many investors pool
their money to be managed by a professional statt.
21. Investment Advisers Act: under securities law, a person who, for compensation, engages in the
business of advising others as to the advisability of investing in, purchasing, or selling securities. This includes securities
brokers and dealers
22. Churning: refers to the excessive buying and selling of securities in a securities investment account by a broker,
for the purpose of generating commissions and without regard to investment objectives.
23. Scalping: when a securities professional buys (or sells) a number of shares of an investor's security at the bid (or
ask) price and then, when the price moves, quickly sells (or buys) the same security from the professional's own
account for a higher (or lower) price for a profit generated by trading the client's account.
24. Truth-in-lending Act: requires creditors in consumer transactions to disclose basic information about the
ANSWERS
1. Under Regulation D, you can solicit funds for up to and not need
to file a RegistrationStatement before receiving funding: $1,000,000
2. Issuance of new shares of stock by a start-up company is an example of: Equity
Financing
3. Vronsky is an executive at ABC Company. On January 1, 2022, he was given
options byABC allowing him to buy up to 1,000 shares of ABC shares at any
time during 2022 at aprice of $ 30 per share. (On the day he was given these
options, the market price of ABCshares was $20 per share.) On December 1,
2022, the market share price was $ 38, andJohn exercised his option to buy all
1,000 shares on that date. What was his profit?: $8,000
4. blue sky laws: name given to state laws that regulate the otter and sale of securities.
5. stock: A share of ownership in a corporation.
6. bonds: A certificate issued by a government or private company which promises to pay back with interest the
money borrowed from the buyer of the certificate: The city issued bonds to raise money for putting in new sewers.
7. equity financing: when a business obtains funds by issuing ownership shares to investors in the organiza-
tion.
8. Securities and Exchange Commission (SEC): a regulated market where securities, such as
stocks, are traded.
9. SEC disclosure requirements: publicly owned companies to disclose certain types of business and
financial data on a regular basis to the SEC and to the company's stockholders.
10. registration statement: in securities law, the financial information that must be filed with the Securities and
Exchange Commission for review prior to the sale of securities to the public.
11. prospectus: under securities law, a pamphlet that must be produced for distribution to prospective
,12. exemptions from registration: below $ 5.0M in funds solicited over 12 months - in securities law,
provisions that allow certain securities to be sold without meeting the usual registration requirements with the Securities and
Exchange Commission; does not exempt the securities from other aspects of securities laws.
well known seasoned issuers
13. well-known seasoned issuers (WKSI): most securities issued by these
-previously have ottered $1B in debt securities
-or have a public equity market capitalization of at least $700M
-can file a registration the day a new ottering is available
, -can shelf register (k=continually update the prospectus online)
-can sell at any time within the next 3 years
14. Tender offers: an otter open to current stockholders to buy a stock at a certain price; otter may be contingent
upon receiving a certain amount of stock before any purchase is completed or may be an open otter; a method used to
obtain enough stock to control a corporation
15. securities fraud: in securities law, the statutory basis for charging anyone involved in the issuance or trading of
securities with fraud, which is usually due to misleading issuance of information or failure to disclose material
information that causes investors to sutter losses.
16. misstatements: in securities law, liability may be imposed on those responsible for issuing information
about securities that misleads a reasonable investor in investment decisions to her detriment; may be part of fraud.
17. insider trading: the buying or selling of securities of a firm by persons who have information about the firm not
yet available to the public and who expect to make a profit through those transactions.
18. "material nonpublic information" and famous Texas Gulf Sulfur case: they did
release information to the public that could change the stock, insiders bought stock first
19. Investment Company Act: any corporation in business to own and hold the stock of other corporations
20. mutual funds: an investment vehicle regulated by the Investment Company Act, where many investors pool
their money to be managed by a professional statt.
21. Investment Advisers Act: under securities law, a person who, for compensation, engages in the
business of advising others as to the advisability of investing in, purchasing, or selling securities. This includes securities
brokers and dealers
22. Churning: refers to the excessive buying and selling of securities in a securities investment account by a broker,
for the purpose of generating commissions and without regard to investment objectives.
23. Scalping: when a securities professional buys (or sells) a number of shares of an investor's security at the bid (or
ask) price and then, when the price moves, quickly sells (or buys) the same security from the professional's own
account for a higher (or lower) price for a profit generated by trading the client's account.
24. Truth-in-lending Act: requires creditors in consumer transactions to disclose basic information about the
