LSB Exam 4 Updated QUESTIONS AND
CORRECT ANSWERS
Security transactions involving the original issuance and reissuance of securities by a
business to raise capital are called the - CORRECT ANSWER primary market
A company is said to "go public" when it sells its voting ___ shares for the first time to
outside investors through use of public markets such as the new york stock exchange -
CORRECT ANSWER common
The federal laws, regulations, and exemptions governing the primary market are found in the
securities act of - CORRECT ANSWER 1933
___ investors hold securities directly or through a brokerage firm and ___ investors hold
securities through pension funds and mutual funds - CORRECT
ANSWER individual;institutional
The most common type of ___ are brokerage firms, referred to as broker-dealers, that buy and
sell securities on behalf of a client - CORRECT ANSWER intermediaries
A public outcry and a growing lack of investor confidence in corporate financial disclosures
caused congress to overhaul the entire corporate governance regulatory structure by passing
the - CORRECT ANSWER sarbanes-oxley act of 2002
The public outcry over the enron scandal and waning public confidence in the oversight of
financial frauds in the market led-___ to pass several laws to improve the quality of financial
disclosure by public corporations - CORRECT ANSWER congress
Under sarbanes-oxley, requiring the payback of corporate bonuses that were awarded and
later found to be based on false disclosure is called a ___ provision - CORRECT
ANSWER clawback
, The sarbanes-oxley act seeks to increase ___ independence - CORRECT
ANSWER auditor
The loan program created by the american recovery and reinvestment act of 2009, established
the ___ to administer the loans - CORRECT ANSWER troubled assets relief program
A common form of agency is a(n) ___ relationship - CORRECT ANSWER employer-
employee
If juan hires abc painting, inc to paint his house, but the house is destroyed by a fire sparked
by a lightning strike before abc begins to paint, the agency relationship between juan and abc
is terminated by - CORRECT ANSWER operation of law
To determine whether the parties have in fact manifested an offer of agency and acceptance
by the agent, courts apply a(n) ___ standard - CORRECT ANSWER objective
An agent classified as a(n) ___ is not considered an employee and has no legal protections of
employees, such as minimum and overtime compensation laws - CORRECT
ANSWER independent contractor
Suppose that jeff and douglas are college roommates. Both chose to do their laundry at the
dormitory laundry facility on tuesday evening. Since jeff had to study for a biology exam, he
asked doug to pick up his laundry as a favor for him when it is done, and doug agreed to do
so. In this case, doug is - CORRECT ANSWER jeff's gratuitous agent
The FLSA cannot be properly understood without reference to two major historical events
that occurred during the earlier parts of the twentieth century - CORRECT
ANSWER industrial revolution and the great depression
Morris is a nonexempt employee with a salary of $400 a week based on a 40-hour week. If he
works 50 hours in a particular week, his paycheck should be for - CORRECT
ANSWER $550
CORRECT ANSWERS
Security transactions involving the original issuance and reissuance of securities by a
business to raise capital are called the - CORRECT ANSWER primary market
A company is said to "go public" when it sells its voting ___ shares for the first time to
outside investors through use of public markets such as the new york stock exchange -
CORRECT ANSWER common
The federal laws, regulations, and exemptions governing the primary market are found in the
securities act of - CORRECT ANSWER 1933
___ investors hold securities directly or through a brokerage firm and ___ investors hold
securities through pension funds and mutual funds - CORRECT
ANSWER individual;institutional
The most common type of ___ are brokerage firms, referred to as broker-dealers, that buy and
sell securities on behalf of a client - CORRECT ANSWER intermediaries
A public outcry and a growing lack of investor confidence in corporate financial disclosures
caused congress to overhaul the entire corporate governance regulatory structure by passing
the - CORRECT ANSWER sarbanes-oxley act of 2002
The public outcry over the enron scandal and waning public confidence in the oversight of
financial frauds in the market led-___ to pass several laws to improve the quality of financial
disclosure by public corporations - CORRECT ANSWER congress
Under sarbanes-oxley, requiring the payback of corporate bonuses that were awarded and
later found to be based on false disclosure is called a ___ provision - CORRECT
ANSWER clawback
, The sarbanes-oxley act seeks to increase ___ independence - CORRECT
ANSWER auditor
The loan program created by the american recovery and reinvestment act of 2009, established
the ___ to administer the loans - CORRECT ANSWER troubled assets relief program
A common form of agency is a(n) ___ relationship - CORRECT ANSWER employer-
employee
If juan hires abc painting, inc to paint his house, but the house is destroyed by a fire sparked
by a lightning strike before abc begins to paint, the agency relationship between juan and abc
is terminated by - CORRECT ANSWER operation of law
To determine whether the parties have in fact manifested an offer of agency and acceptance
by the agent, courts apply a(n) ___ standard - CORRECT ANSWER objective
An agent classified as a(n) ___ is not considered an employee and has no legal protections of
employees, such as minimum and overtime compensation laws - CORRECT
ANSWER independent contractor
Suppose that jeff and douglas are college roommates. Both chose to do their laundry at the
dormitory laundry facility on tuesday evening. Since jeff had to study for a biology exam, he
asked doug to pick up his laundry as a favor for him when it is done, and doug agreed to do
so. In this case, doug is - CORRECT ANSWER jeff's gratuitous agent
The FLSA cannot be properly understood without reference to two major historical events
that occurred during the earlier parts of the twentieth century - CORRECT
ANSWER industrial revolution and the great depression
Morris is a nonexempt employee with a salary of $400 a week based on a 40-hour week. If he
works 50 hours in a particular week, his paycheck should be for - CORRECT
ANSWER $550
