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S 66 > Ch. 2 > Flashcards

Ch. 2 Flashcards

1
Q

Is a futures contract considered a security?

A

No, but an option on a futures contract is a security.

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2
Q

State registration remains in effect for ______ year(s)

A

One

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3
Q

According to NSMIA, when is an investment pool considered a federal covered security?

A

When it registers as an investment company under the Investment Company Act of 1940

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4
Q

T/F: IRAs and Keogh plans are considered securities.

A

F; the participation in these plans (what goes in the plan) is considered a security, but the plan itself is not.

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5
Q

T/F: Agents selling unregistered, non exempt securities to banks and trust companies are violating the USA.

A

F; transactions with banks and trust companies are considered exempt transactions

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6
Q

Is an endowment life insurance policy a security?

A

No

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7
Q

Is a Keogh plan considered a security?

A

No, but Keogh plan participation is considered a security

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8
Q

Do the anti fraud provisions of the USA apply to exempt securities?

A

Yes, nothing is exempt from fraud

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9
Q

Are securities issued by a software company exempt from state registration?

A

No

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10
Q

Under the USA, is stock issued by an electric company an exempt security or an exempt transaction?

A

Securities issued by public utilities are considered exempt securities

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11
Q

T/F: A trade of unregistered, non exempt securities between two BDs is a violation of the USA.

A

F; this is an exempt transaction

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12
Q

NSMIA indicates that securities listed on the NYSE and Nasdaq are _______ _______ securities.

A

Federal covered

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13
Q

Are bonds issued by the City of New York exempt from state registration?

A

Yes

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14
Q

T/F: Two friends, anticipating a rise in value, purchase property. The property is considered a security.

A

F

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15
Q

What is the minimum cooling off period for registration by notification?

A

Five days

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16
Q

To use Filing (Notification) to register stock, the offering price must be at least $_____ per share.

A

$5

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17
Q

Is a limited partnership a security?

A

Yes

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18
Q

T/F: Securities issued by municipalities of Mexico are exempt under the USA.

A

T; An exemption applies to securities issued by foreign governments with while the US has diplomatic relations.

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19
Q

Transactions between the issuer and its underwriter are considered _______ transactions.

A

Exempt

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20
Q

Is a whiskey warehouse receipt considered a security?

A

Yes

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21
Q

For certain federal covered securities, may an Administrator require the issuer to complete the notice filing?

A

Yes. Notice filing is the process by which information filed with the SEC is also filed/shared with the Administrator

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22
Q

Is a pre organization certificate a security?

A

Yes

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23
Q

T/F: Paperwork related to coordination is filed with the Administrator at the same time as the SEC filing.

A

F; registration will become effective simultaneously with SEC registration, but need not be filed at the same time

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24
Q

Non issuer trading of securities subject to reporting requirements of the Act of 1934 are __________ transactions.

A

Exempt

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25
Q

Are securities that are traded on the Toronto Stock Exchange subject to state registration requirements?

A

No. These secondary market transactions are considered exempt from registration according to the USA

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26
Q

An executor of an estate sells a block of securities that are not registered. Is this a violation?

A

No. This is an example of an exempt transaction.

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27
Q

If an Administrator was aware of facts before a registration became effective, a stop order may be issued if done within ___ days.

A

30

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28
Q

Regarding federal covered securities, may an Administrator cancel a registration?

A

No

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29
Q

A car dealer gives 100 shares of stock to all new car buyers. Is this considered a sale of securities?

A

Yes. Since the gift is contingent on a purchase being made, it is considered a sale of the security

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30
Q

List the securities that are exempt from registration.

A

Government/municipal bonds, commercial paper, BA, bank issues, non profit and small business issues

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31
Q

As it applies to persons and securities, what does the term “exemption” mean in the USA?

A

Exemption signifies that a person or security is not subject to registration under the USA.

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32
Q

Give one examples of insurance company offerings that are exempt from the anti fraud provisions of the USA.

A

Life insurance policies and fixed annuities are exempt from the provisions since they are not securities

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33
Q

Is a debenture considered a security?

A

Yes. A debenture is an unsecured corporate bond.

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34
Q

List some of the different types of institutional clients.

A

IAs, BDs, investment, insurance, or trust companies, banks, savings and loan associations and pension plans

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35
Q

T/F: Soliciting orders for unregistered, non exempt securities is prohibited.

A

T

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36
Q

T/F: According to the USA, debt issued by a fraternal organization would not be considered exempt.

A

F; securities issued by non profit organizations are exempt from state registration

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37
Q

T/F: Under the USA, municipal bonds are federal covered securities.

A

F; municipal bonds are exempt securities. Federal covered securities include listed stocks and mutual fund shares.

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38
Q

Is an unsolicited, non issuer transaction in an OTC stock exempt from state registration?

A

Yes, because it is unsolicited.

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39
Q

Is a multi level distributor ship considered a security?

A

Yes

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40
Q

T/F: Charitable organizations may issue securities.

A

T; the securities issued by charitable organizations are exempt from registration

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41
Q

What type(s) of transaction(s) are exempt from the anti fraud provisions of the USA?

A

None

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42
Q

Is a 401k plan considered a security?

A

No

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43
Q

What four elements are required for an investment contract to be considered a security?

A
  1. An investment of money
  2. A common enterprise
  3. Efforts made by a third party
  4. An expectation or profits
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44
Q

What does the USA consider a security issued by an investment company that is registered under the Investment Company Act of 1940?

A

The securities are considered federal covered

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45
Q

Describe what it means for a security to be registered.

A

The security may be legally offered or sold in the state

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46
Q

T/F: A transaction by an executor is exempt.

A

T; any transaction by an executor, administrator, trustee in bankruptcy, or conservator is considered exempt

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47
Q

T/F: Precious metals are not considered securities.

A

T

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48
Q

T/F: Securities issued by municipalities of Canada are exempt under the USA.

A

T

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49
Q

___________ issued by insurance companies are exempt from state registration.

A

Bonds

50
Q

Is a universals life insurance policy considered a security?

A

No

51
Q

Who must prove that an exemption exists?

A

The party claiming the exemption

52
Q

T/F: Securities that are issued by registered investment companies are considered federal covered securities.

A

T

53
Q

Is Keogh plan participation considered a security?

A

Yes, but the Keogh plan itself is not a security.

54
Q

Are securities that are traded on the Pink Market exempt?

A

No

55
Q

Is a voting trust certificate a security?

A

Yes

56
Q

Is an option on a commodity futures contract a security?

A

Yes. Options are securities, but futures contracts alone are not. Options may be tied to an equity, index, or currency

57
Q

Name some of the federal covered securities.

A

Securities listed on an exchange, issued by an investment company, and sold as a private placement (Reg. D Rule 506)

58
Q

Regarding federal covered securities, may and Administrator prohibit the sale of the security in his state?

A

No

59
Q

The solicitation of buyers for unregistered, non exempt securities is __________.

A

Prohibited

60
Q

Which Act regulated UITs?

A

The Investment Company Act of 1940

61
Q

What criteria must be met for commercial paper to be exempt from registration?

A

A 270 day maximum life, minimum denomination of $50,000, rated in one of the top three categories according to NRSRO

62
Q

T/F: Options on commodities are securities

A

T; options are always considered securities

63
Q

Registration by Coordination has a minimum cooling off period of ______ days.

A

10

64
Q

Accepting orders for unregistered, non exempt securities is allows if clients attest that the trade was ___________.

A

Unsolicited

65
Q

T/F: Securities that are listed on the NYSE are exempt from state registration.

A

T

66
Q

In order to qualify for an exemption, who bears the burden of proof?

A

The person claiming the exemption

67
Q

Registration by Coordination regulates issuers to meet requirements of the ISA as well as what other Act?

A

The Securities Act of 1933

68
Q

T/F: An Administrator may not require a sales report from the issuer of an OTC security.

A

F

69
Q

What’s an issuer transaction?

A

A transaction in which the issuer received the proceeds

70
Q

T/F: Occasional, secondary market transactions in OTC stocks are considered exempt transactions.

A

F; only non recurring secondary market transactions are considered exempt transactions.

71
Q

T/F: Variable annuities are not securities and are, therefore, not subject to registration.

A

F; any variable producers are considered securities. However, fixed insurance products are not securities

72
Q

Is a variable life insurance policy a security?

A

Yes, but a term or universal life insurance policy is not considered a security

73
Q

T/F: Securities issued by the states and municipalities of Mexico are exempt from registration under the USA.

A

T; an exemption is provided to securities issued by foreign governments with whom the US has diplomatic relations

74
Q

T/F: An ADR is a security.

A

T

75
Q

Is a warrant a security?

A

Yes. Warrants are financial instruments that allow investors to acquire stock at a preset price.

76
Q

What form of state registration is not available in all states?

A

Notification (filing)

77
Q

T/F: A state may require a registration fee from the issuer of a Nasdaq security.

A

F; Nasdaq securities are federal covered securities

78
Q

What instruments are used to facilitate trading of foreign securities in the US?

A

ADRs

79
Q

T/F: The sale of securities to a pension plan is considered an exempt transaction under the USA.

A

T

80
Q

Which method of state securities registration would likely be used for an IPO being offered in several states?

A

Coordination

81
Q

T/F: A state Administrator may require notice filing by an issuer of an NYSE security.

A

F; Notice filing is required for mutual funds and Reg D offerings, but not exchange listed securities

82
Q

How would a well established corporation register a subsequent offering to be sold in multiple states?

A

Notification (filing)

83
Q

Though some securities are exempt from registration, nothing is exempt from the _______ provisions of the Act.

A

Anti fraud

84
Q

Is a fixed annuity a security?

A

No, but variable contracts are considered securities

85
Q

An intrastate offering may use which method of state securities registration?

A

Qualification

86
Q

Under the USA, private placements are exempt if securities are offered to _____ or fewer retail clients over ____ months.

A

10; 12 months

87
Q

T/F: Bonds issued by a railroad are exempt from state registration.

A

T; securities issued by a railroad, common carrier, or public utility are exempt at the state level

88
Q

What method of state securities registration requires issuers to wait to hear from the Administrator before selling?

A

Qualification

89
Q

T/F: Securities of a Canadian company, but listed on the NYSE, are exempt from state registration.

A

T

90
Q

Is an isolated, non recurring, non issuer transaction in OTC stock subject to registration?

A

No it is considered an exempt transaction.

91
Q

Lost some securities that are considered federal covered and exempt from registration.

A

Those listed on national exchanges and investment company securities

92
Q

Registration by Filing (Notification) requires issuers to be in business at least ______ months preceding registration.

A

36 months

93
Q

Is treasury stock considered a security?

A

Yes. Treasury stock is stock that was issued and subsequently repurchased by the company.

94
Q

T/F: Securities issued by the US Treasury and US Agencies are deemed exempt securities under the USA.

A

T

95
Q

If an IPO is being registered, an issuer is most likely using what form of state registration?

A

Coordination

96
Q

Define an investment contract (according to the Howey Test)

A

An investment of money, in a common enterprise, with expectation of profit due to efforts of a third party management

97
Q

T/F: A certificate of interest in a mining title is a security under the USA.

A

T; certificates of interest in mining or drilling titles are securities under the USA

98
Q

Is an investment interest in livestock considered a security?

A

Yes

99
Q

T/F: An issuer whose securities trade on the NYSE must pay a registration fee to a state Administrator.

A

F

100
Q

If a Nasdaq stock trades in the secondary market, does the USA consider it an exempt security or exempt transaction?

A

Exempt security

101
Q

T/F: Securities issued by provinces and municipalities of Canada are subject to state registration.

A

F; securities issued by Canadian provinces or municipalities are exempt from registration.

102
Q

T/F: Under the USA, debentures issued by a Canadian bank are exempt from registration.

A

F

103
Q

Is a preemptive right considered a security?

A

Yes

104
Q

The USA considered pre-organization certificates, prime bank notes, and voting trust certificates to be _______.

A

Securities

105
Q

Under the USA, is a federal covered security trading in the secondary market an exempt security or an exempt transaction?

A

Exempt security

106
Q

May a state prevent the sale of a federal covered security in its state?

A

No. Federal covered securities are not regulated by the state.

107
Q

T/F: Federal covered securities issuers may be required to pay a filing fee to an Administrator.

A

T; certain types of federal covered securities issuers may be required to pay a filing fee

108
Q

Is an interest in oil and gas drilling program considered a security?

A

Yes

109
Q

An ___________ policy is a type of life insurance that pays face value at the end of a period.

A

Endowment

110
Q

T/F: BAs rated AAA, maturing in 6 months, and issued in $25,000 denominations are exempt.

A

F; because the BAs were not issued in at least denominations of $50,000, registration is required

111
Q

Registration by Filing (Notification) requires that the underwriting commission be no more than ____%

A

10

112
Q

Is a private placement considered an exempt transaction or an exempt security under the USA?

A

Exempt transaction

113
Q

Is an IRA account considered a security?

A

No

114
Q

Is a certificate of interest in a mining lease a security?

A

Yes

115
Q

Are bonds issued by a charitable organization subject to state registration?

A

No. Securities issued by non profit organizations are exempt from registration

116
Q

Securities issued by any government with whom the US has _______ relations are exempt from state registration.

A

Diplomatic

117
Q

The only form of state registration that has its effective date set by the Administrator is ____________.

A

Qualification

118
Q

Identify the three forms of state securities registration.

A

Notification (Filing), coordination, qualification.

119
Q

Is an interest in a real wastage condo development considered a security?

A

Yes

120
Q

T/F: Exchange listed futures contracts are securities.

A

F; futures and forward contracts are not securities

S 66 (12 decks)

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