Securities (Stock)

Question 1

Securities - Valuation

Answer 1

In general, the issuance of stock must be authorized by the board of directors.

1. Valuation
   
   • The board of directors must determine that the consideration (for example, money) paid for the stock is adequate.
   • Par Value Stock
     
     • In the process of incorporating, a corporation may issue par value stock. For such stock, the corporation is required to receive at least the value assigned to the stock (the par value). The par value does not have to be market value and can be a nominal (small amount).

Question 2

Securities - Federal Causes of Action for Improper Sale of Securities (Stock)

Answer 2

Federal causes of action for violation of “Rule 10(b)(5)” and “Section 16(b)” are based on the purchase and sale of stock. These causes of action are not frequently tested issues. See the outline for more information.