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6 Cards in this Set

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All of the following are TRUE of the limit up/limit down rule EXCEPT:



A) it is a rule designed to address severe and sudden price movements.


B) it utilizes specified price bands which prevent trades in stocks from occurring outside of those bands.


C) the mechanism employs trading pauses or halts for prolonged price movements.


D) price band parameters are the same during market opening and closing times as they are during all trading hours.

Answer: D



The limit up/limit down rule is designed to address severe and sudden price movements. It utilizes specified price bands (expressed as % depending on the current price of the stock) which prevents trades in stocks from occurring outside of those bands and employs trading pauses or halts for prolonged price movements. To account for increased volatility during market openings and closings, the % parameters governing the price bands are doubled during those times.

To launder illicit funds effectively, the money must go through a process known as layering. Layering will typically involve:



A) the deposit of illegal funds in a financial institution willing to launder them.


B) the use of transfers through several legal and governmental jurisdictions.


C) over-invoicing techniques that commingle illegal funds with legitimate funds.


D) the use of illegal funds to purchase goods that can later be sold.

Answer: B



The layering stage is where launderers attempt to conceal the source of the funds or assets. During this phase, launderers will transfer funds to multiple jurisdictions, deposit cash overseas, and resell assets in multiple jurisdictions. The key to successful layering is the crossing of several legal and governmental jurisdictions. This allows launderers to take full advantage of the varying degrees of regulation and the bureaucracy of different governmental cooperation laws.

Under federal law, stock can be tendered from all of the following accounts EXCEPT:



A) long margin accounts


B) short margin accounts


C) restricted margin accounts


D) cash accounts

Answer: B



Under the short tender rule, shareholders can only tender stock to the extent of their stock's net long position; stock in a short account is borrowed stock.

Which of the following events would require public disclosure and a corporation to file a report with the SEC?



A) The co. is featured in a trade journal.


B) The company's employees strike.


C) The value of the company's shares rises by more than 1% in a single day.


D) The number of registered market makers in the company's stock increases.

Answer: B



A strike would materially impair the ability of the co. to perform. This is a significant event requiring public disclosure.

Registered corporations are required to file certain reports with the SEC. All of the following statements regarding those reports are true EXCEPT:



A) the annual report contains both a balance sheet and income statement.


B) the financial statements must be audited.


C) copies of the annual report must be sent to shareholders of record.


D) the audit may be performed by the corporation's Chief Financial Officer.

Answer: D



The audit must be performed by an independent auditor.

The securities of KLC Corp are listed on a national exchange. Which of the following details must it provide in regular reports?



A) Proposed changes in the duties of the board of directors.


B) Proposed changes in the organization of the workforce.


C) The firm's financial status.


D) Total domestic market share of each of its products.

Answer: C



Publicly traded issuers must report their financial status to the SEC annually on Form 10K