Describe the exemptions from the registration process under the Securities Act of 1933
What will be an ideal response?
The exemptions from the registration process under the Securities Act of 1933 include:
a. Private placement: Transactions by an issuing company not involving any public offering. Usually, the transaction involves sophisticated investors with enough knowledge to evaluate information given them (e.g., stock option plans for top-level management).
b. Intrastate offering: Any security or part of an offering offered or sold to persons resident within a single state or territory.
c. Small business: Section 3(b) of the 1933 Act allows the SEC to exempt offerings not exceeding $5 million. Regulations A and D promulgated by the SEC define the type of investors and the amount of securities that are exempt within a certain time period.
d. Other offering exemptions: By virtue of the 1933 Act, exemptions are allowed for transactions by any person other than an issuer, underwriter, or dealer. Also, government securities (federal, state, or municipal bonds) are exempt. Also exempt are securities issued by banks, charitable organizations, and savings and loans institutions.
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Payments from customers before they receive a product or service.
(a) initial franchise fee (b) assurance-type warranty (c) upfront fees (d) contract liability
Of these choices, a risk-adverse investor who prefers to minimize interest rate risk is most apt to invest in:
A. 5-year, 7 percent coupon bonds. B. 20-year, 6 percent coupon bonds. C. 20-year, zero coupon bonds. D. 2-year, 7 percent coupon bonds. E. 3-year, zero coupon bonds.