Chapter 19 Questions Key1. Hudsucker Corp is a public company whose securities are traded among investors. Under the Securities Act of 1933, a security is:a. Almost any stake in the ownership or debt of a companyb. An investment that is guaranteed to make a profitc. Only such common forms of debt and equity as stocks and bondsd. Whatever a company represents to the public as a security2. Jimmy, the CEO of McNulty, Inc., intentionally understates the amount of McNulty’s debts in information provided to investors as part of an issue of McNulty’s stock. Rhonda buys the stock and suffers a loss. Jimmy may be subject to:a. Government prosecution and Rhonda’s suitb. Neither government prosecution nor Rhonda’s suitc. Only government prosecutiond. Only Rhonda’s suit3. Gonzo’s Plumbing Corporation is poised to issue securities that, under the Securities Act of 1933, are exempt. This means that the securities can be sold:a. On the basis of a material omission or misrepresentationb. On the basis of nonpublic informationc. Within any six-month period by certain insidersd. Without being registered4. Cooper, an engineer for the Douglas Fir Seed Corporation, learns that Douglas Fir has developed a hybrid to triple the output of any farm. Cooper buys 20,000 shares of Douglas Fir stock. He tells Truman, who buys 15,000 shares. After the new hybrid is announced publicly, the price of Douglas Fir stock increases. Cooper and Truman sell their shares for a profit. Under the Securities Exchange Act of 1934, liability may be imposed on:a. None of these partiesb. Cooper and Truman onlyc. Cooper onlyd. Cooper, Douglas Fir, and Truman5. Nadine, an officer for Silent Drape Runner (SDR) Corporation, buys 100 shares of SDR stock. One week later, SDR announces that it will merge with a competitor, Noiseless Curtains, Inc., and the price of SDR stock increases. One month later, Nadine sells her shares for a profit. Under Section 16(b) of the Securities Exchange Act of 1934, Nadine would NOT be liable if, after buying the stock, she had waited:a. Less than fourteen days to sell itb. More than six months to sell itc. Ninety days to sell itd. Two months to sell it6. To raise $12 million to expand operations, Star Corporation makes a stock offering directly to sixty accredited investors and twenty sophisticated, but unaccredited investors. Star plans to notify the SEC of sales. Under the Securities Act of 1933, this issue may qualify as an 'exempt' transaction:a. As isb. If the offspring is also made available to the publicc. If all of the investors are also given certain material informationd. Under no circumstances7. New Discoveries Corporation and its officers, directors, and shareholders buy and sell securities. Section 10(b) of the Securities Exchange Act of 1934 applies to:a. Only the purchase or sale of a security by an investment companyb. Only the purchase or sale of a security involving short-swing profitsc. Only the purchase or sale of a security involving a tipper and tippeed. The purchase or sale of any security8. Celfone Corporation is required to file a registration statement with the Securities and Exchange Commission. This statement must contain:a. A copy of prospectuses to be provided to investorsb. A description of securities being offered for salec. A record of pre-registration sales in securitiesd. A sample of advertising to be used to attract investments in