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Question 1 of 10
1. Question
Which securities are eligible to sold as specified by The Uniform Securities Act?
I. A security must either be a federally covered security.
II. A security that is currently registered with the state Administrator in accordance with the provisions of the Uniform Securities Act.
III. A security that is not exempt from both federal and state registration.
IV. A security that is exempt from both federal and state registration.
Correct
The Uniform Securities Act specifies that securities are only eligible to be sold (or offered for sale) if the security falls into one of three categories. In order to be lawfully available for sale within the state, a security must either be a federally covered security, a security that is currently registered with the state Administrator in accordance with the provisions of the Uniform Securities Act, or a security that is exempt from both federal and state registration. It is illegal for any person to sell or offer to sell any security that does not fall under one of the categories listed above. This requirement applies whether the person selling, or offering to sell, the security as a registered securities professional (such as a broker-dealer) or not.
Incorrect
The Uniform Securities Act specifies that securities are only eligible to be sold (or offered for sale) if the security falls into one of three categories. In order to be lawfully available for sale within the state, a security must either be a federally covered security, a security that is currently registered with the state Administrator in accordance with the provisions of the Uniform Securities Act, or a security that is exempt from both federal and state registration. It is illegal for any person to sell or offer to sell any security that does not fall under one of the categories listed above. This requirement applies whether the person selling, or offering to sell, the security as a registered securities professional (such as a broker-dealer) or not.
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Question 2 of 10
2. Question
What additional information issuers must provide to register a security from businesses operational for fewer than five years?
I. A summary of their earnings for the two previous fiscal years.
II. A balance sheet for the business that covers the four-month period immediately preceding the filing.
III. An annual report of the previous fiscal year.
IV. A semi annual report of the current year.
Correct
Special requirements apply to issuers of securities seeking to register a security using the registration by filing process (also known as the registration by notification process) if the issuer has been in business for less than five continuous years. Issuers falling into this category may still use the registration by filing process, if otherwise qualified. However, such issuers must provide additional information along with the information and documentation normally required for this type of filing. First, issuers that have not been in business continually for five years must provide a summary of their earnings for the two previous fiscal years. In addition, the issuer must provide a balance sheet for the business that covers the four-month period immediately preceding the filing.
Incorrect
Special requirements apply to issuers of securities seeking to register a security using the registration by filing process (also known as the registration by notification process) if the issuer has been in business for less than five continuous years. Issuers falling into this category may still use the registration by filing process, if otherwise qualified. However, such issuers must provide additional information along with the information and documentation normally required for this type of filing. First, issuers that have not been in business continually for five years must provide a summary of their earnings for the two previous fiscal years. In addition, the issuer must provide a balance sheet for the business that covers the four-month period immediately preceding the filing.
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Question 3 of 10
3. Question
What are the features of Registration by qualification?
I. It is the process that must be followed if the security in question must be registered with the state Administrator.
II. Issuers seeking to register a security by qualification must provide a significant amount of detailed information with the registration statement in addition to the standard filing requirements for securities.
III. The registration of securities registered under the registration by qualification process does not become effective automatically.
IV. The registration only becomes effective if and when ordered by the Administrator.
Correct
Registration by qualification is the most difficult method of registering a security with a state Administrator. Registration by qualification is the process that must be followed if the security in question must be registered with the state Administrator, but the security (or issuer) does not qualify for registration under either the registration by coordination process or the registration by filing (also known as the registration by notification process). Issuers seeking to register a security by qualification must provide a significant amount of detailed information with the registration statement in addition to the standard filing requirements for securities (including the consent to service of process). The registration of securities registered under the registration by qualification process does not become effective automatically. The registration only becomes effective if and when ordered by the Administrator.
Incorrect
Registration by qualification is the most difficult method of registering a security with a state Administrator. Registration by qualification is the process that must be followed if the security in question must be registered with the state Administrator, but the security (or issuer) does not qualify for registration under either the registration by coordination process or the registration by filing (also known as the registration by notification process). Issuers seeking to register a security by qualification must provide a significant amount of detailed information with the registration statement in addition to the standard filing requirements for securities (including the consent to service of process). The registration of securities registered under the registration by qualification process does not become effective automatically. The registration only becomes effective if and when ordered by the Administrator.
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Question 4 of 10
4. Question
When the issuer registers a security using the registration by qualification process, the registration statement for the security must include specific information regarding the issuer’s officers and directors. What kind of information is this?
I. The name and address of each and every one of the issuer’s directors and officers.
II. Indicate the primary employment for the preceding five years for each of the issuer’s directors and officers.
III. the issuer must specify the volume of the issuer’s securities possessed by each officer and director as of a date that is no earlier than thirty days prior to the date of filing.
IV. The issue must also specify the volume of the security or securities to be registered that each director and officer plans to possess.
Correct
When the issuer registers a security using the registration by qualification process, the registration statement for the security must include specific information regarding the issuer’s officers and directors. The registration statement must provide the name and address of each and every one of the issuer’s directors and officers and indicate the primary employment for the preceding five years for each of the issuer’s directors and officers. In addition to this biographical information, the issuer must specify the volume of the issuer’s securities possessed by each officer and director as of a date that is no earlier than thirty days prior to the date of filing, and the issue must also specify the volume of the security or securities to be registered that each director and officer plans to possess. Finally, the issuer must state the actual compensation for each director and officer for the previous year and the anticipated compensation for the next year.
Incorrect
When the issuer registers a security using the registration by qualification process, the registration statement for the security must include specific information regarding the issuer’s officers and directors. The registration statement must provide the name and address of each and every one of the issuer’s directors and officers and indicate the primary employment for the preceding five years for each of the issuer’s directors and officers. In addition to this biographical information, the issuer must specify the volume of the issuer’s securities possessed by each officer and director as of a date that is no earlier than thirty days prior to the date of filing, and the issue must also specify the volume of the security or securities to be registered that each director and officer plans to possess. Finally, the issuer must state the actual compensation for each director and officer for the previous year and the anticipated compensation for the next year.
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Question 5 of 10
5. Question
What information regarding user must be included in the application for registration for securities registered by qualification?
I. The facts surrounding the issuer’s business organization.
II. The state that has jurisdiction over the issuer’s company organization.
III. Te structure of the issuer’s organization.
IV. List any equipment and material property owned by the issuer.
Correct
The application for registration for securities registered by qualification must include a significant amount of information regarding the issuer of the security. In addition to the issuer’s name and address, the registration must contain information regarding the facts surrounding the issuer’s business organization. The required information includes the state (or foreign country, if applicable) that has jurisdiction over the issuer’s company organization; the structure of the issuer’s organization (e.g., corporation, limited
partnerships, etc.); and the date of the issuer’s organization. The registration statement must also list any equipment and material property owned by the issuer. Finally, the registration statement must include a discussion of the competitive environment for the type of business in which the issuer operates (or will operate).Incorrect
The application for registration for securities registered by qualification must include a significant amount of information regarding the issuer of the security. In addition to the issuer’s name and address, the registration must contain information regarding the facts surrounding the issuer’s business organization. The required information includes the state (or foreign country, if applicable) that has jurisdiction over the issuer’s company organization; the structure of the issuer’s organization (e.g., corporation, limited
partnerships, etc.); and the date of the issuer’s organization. The registration statement must also list any equipment and material property owned by the issuer. Finally, the registration statement must include a discussion of the competitive environment for the type of business in which the issuer operates (or will operate). -
Question 6 of 10
6. Question
Which securities are included under Federally covered securities?
I. Securities that are traded on the New York Stock Exchange.
II. Securities that are traded on the American Stock Exchange.
III. Securities that are traded on the National Market segment of NASDAQ.
IV. Securities that are traded on the International Market segment of NASDAQ.
Correct
Federally covered securities include securities that are traded (or that are authorized to be traded) on the New York Stock Exchange, the American Stock Exchange, or the National Market segment of NASDAQ. Any security that is traded on a national exchange that the Securities Exchange Commission (SEC) determines is substantively similar to the exchanges listed above is also considered a federally covered security. Other federally covered securities include securities issued by a municipal or other government issuer located outside the state where the securities are offered; securities that are only offered to the issuer’s existing securities owners where no commissions (or other form of compensation) applies to the solicitation of the exchange of security; and securities offered by an issuer that is registered (or that has filed a registration statement) under the Investment Company Act of 1940 (although federally covered, states may require a notice filing for investment company securities).
Incorrect
Federally covered securities include securities that are traded (or that are authorized to be traded) on the New York Stock Exchange, the American Stock Exchange, or the National Market segment of NASDAQ. Any security that is traded on a national exchange that the Securities Exchange Commission (SEC) determines is substantively similar to the exchanges listed above is also considered a federally covered security. Other federally covered securities include securities issued by a municipal or other government issuer located outside the state where the securities are offered; securities that are only offered to the issuer’s existing securities owners where no commissions (or other form of compensation) applies to the solicitation of the exchange of security; and securities offered by an issuer that is registered (or that has filed a registration statement) under the Investment Company Act of 1940 (although federally covered, states may require a notice filing for investment company securities).
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Question 7 of 10
7. Question
Which if the following types of securities are not exempted from registration with the state?
I. Securities that are issued, guaranteed, or otherwise insured by the government of the United States.
II. Securities that are issued, guaranteed, or otherwise insured by state or municipal governments.
III. Securities that are issued, guaranteed, or otherwise insured by any governmental body in Canada.
IV. Securities that are issued, guaranteed, or otherwise insured by the federal government of any country with which the United States maintains diplomatic relations.
Correct
A number of the securities that are considered exempt from registration with the state Administrator are exempt due to the fact that another governing body is responsible for the security in question. The following types of securities are exempt from registration with the state: securities that are issued, guaranteed, or otherwise insured by the government of the United States (including securities issued by the United States Treasury); securities that are issued, guaranteed, or otherwise insured by state or municipal governments; securities that are issued, guaranteed, or otherwise insured by any governmental body in Canada (whether local or federal); and securities that are issued, guaranteed, or otherwise insured by the federal government of any country with which the United States maintains diplomatic relations. Although these securities are exempt from registration, state Administrators may require the issuer to pay filing fees normally associated with registration.
Incorrect
A number of the securities that are considered exempt from registration with the state Administrator are exempt due to the fact that another governing body is responsible for the security in question. The following types of securities are exempt from registration with the state: securities that are issued, guaranteed, or otherwise insured by the government of the United States (including securities issued by the United States Treasury); securities that are issued, guaranteed, or otherwise insured by state or municipal governments; securities that are issued, guaranteed, or otherwise insured by any governmental body in Canada (whether local or federal); and securities that are issued, guaranteed, or otherwise insured by the federal government of any country with which the United States maintains diplomatic relations. Although these securities are exempt from registration, state Administrators may require the issuer to pay filing fees normally associated with registration.
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Question 8 of 10
8. Question
Which is not an example of state-exempt securities?
Correct
Many securities issued by persons that are subject to alternative governance or regulation are exempt from registration with the state Administrator. These state-exempt securities include securities issued and/or guaranteed by a bank, savings institution, trust company, savings and loan, building and loan, credit union, or an international bank. These also include securities issued and/or guaranteed by an insurance company to finance a debt. Exempt insurance company securities include any insurance company-offered stocks and/or bonds, but do not include insurance policies that do not constitute securities.
Incorrect
Many securities issued by persons that are subject to alternative governance or regulation are exempt from registration with the state Administrator. These state-exempt securities include securities issued and/or guaranteed by a bank, savings institution, trust company, savings and loan, building and loan, credit union, or an international bank. These also include securities issued and/or guaranteed by an insurance company to finance a debt. Exempt insurance company securities include any insurance company-offered stocks and/or bonds, but do not include insurance policies that do not constitute securities.
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Question 9 of 10
9. Question
What are the features of non-exempt security?
I. A non-exempt security is any security that does not qualify for exemption from registration with the state Administrator due to the identity of the issuer or type of security.
II. A non-exempt security need not be registered with the state Administrator if the non-exempt security will only be used as part of exempt transactions.
III. If all of the transactions involving the security in question are exempt transactions, then the security need not be registered with the state Administrator.
IV. It should be noted that the anti-fraud provisions of the Uniform Securities Act continue to apply for such unregistered securities and transactions.
Correct
There are instances in which a non-exempt security does not need to be registered with the state Administrator. A non-exempt security is any security that does not qualify for exemption from registration with the state Administrator due to the identity of the issuer or type of security. A non-exempt security need not be registered with the state Administrator if the non-exempt security will only be used as part of exempt transactions. Certain securities transactions are considered exempt under the provisions of the Uniform Securities Act due to the nature of the transaction. If all of the transactions involving the security in question are exempt transactions, then the security need not be registered with the state Administrator. However, it should be noted that the anti-fraud provisions of the Uniform Securities Act continue to apply for such unregistered securities and transactions. Issuers must demonstrate that the transaction in question is exempt.
Incorrect
There are instances in which a non-exempt security does not need to be registered with the state Administrator. A non-exempt security is any security that does not qualify for exemption from registration with the state Administrator due to the identity of the issuer or type of security. A non-exempt security need not be registered with the state Administrator if the non-exempt security will only be used as part of exempt transactions. Certain securities transactions are considered exempt under the provisions of the Uniform Securities Act due to the nature of the transaction. If all of the transactions involving the security in question are exempt transactions, then the security need not be registered with the state Administrator. However, it should be noted that the anti-fraud provisions of the Uniform Securities Act continue to apply for such unregistered securities and transactions. Issuers must demonstrate that the transaction in question is exempt.
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Question 10 of 10
10. Question
Which is not an exempt transactions?
I. Unsolicited, non-issuer, client-initiated securities transactions that are handled by a broker- dealer.
II. Non-issuer transactions between foreign non-issuing parties.
III. Isolated securities transactions between two non-issuers handled privately.
IV. III. Isolated securities transactions between two non-issuers handled by a broker/dealer.
Correct
Unsolicited, non-issuer, client-initiated securities transactions that are handled by a broker- dealer are considered exempt transactions. Similarly, non-issuer transactions between foreign non-issuing parties are considered exempt transactions. Isolated securities transactions between two non-issuers are also considered exempt, whether handled privately or by a broker-dealer.
Incorrect
Unsolicited, non-issuer, client-initiated securities transactions that are handled by a broker- dealer are considered exempt transactions. Similarly, non-issuer transactions between foreign non-issuing parties are considered exempt transactions. Isolated securities transactions between two non-issuers are also considered exempt, whether handled privately or by a broker-dealer.