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LGS Final Exam questions with complete solutions
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LGS Final Exam questions with complete solutions
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LGS Final Exam questions withcomplete solutions
Entrepreneurs / Importance of choosing the right business organization - correct answer ✔✔a person
who organizes and operates a business or businesses, taking on greater than normal financial risks in
order to do so
Due diligence / business judgment rule - correct answer ✔✔If you acquired appropriate information,
took an action you believe was right for the company, and the outcome turned out to be bad, the
business judgment rule can protect you from being held accountable for losses and damages that
resulted. you are expected only to make reasonable inquiry.
Electronic data record storage system - correct answer ✔✔a system that manages electronic records
Securities Act of 1933 / purpose of laws - correct answer ✔✔was created and passed into law to protect
investors after the stock market crash of 19291. The primary purpose of the act is to ensure that buyers
of securities receive complete and accurate information before they invest in securities. The act aims to
create transparency in the financial statements of corporations and establish laws against
misrepresentation and fraudulent activities in the securities markets
Securities Exchange Act 1934 - correct answer ✔✔a law that regulates the secondary trading of
securities (stocks, bonds, and debentures) in the united states
IPO - correct answer ✔✔refers to the process of offering shares of a private corporation to the public in
a new stock issuance for the first time. allows a company to raise equity capital from public investors.
Registration statement - correct answer ✔✔a disclosure statement that a business files with the
Securities and Exchange Commission (SEC) when it wants to sell equity securities to the public.
Prospectus - correct answer ✔✔a printed document that advertises or describes a school, commercial
enterprise, forthcoming book, etc., in order to attract or inform clients, members, buyers, or investors.
, SEC (Securities Exchange Commission) - correct answer ✔✔an independent federal regulatory agency
that oversees the stock market and proposes and enforces federal securities laws
Short swing profits - correct answer ✔✔regulation that requires company insiders to return any profits
made from the purchase and sale of company stock if both transactions occur within a six-month period
Insider trading (Sec. 10(b)(5) - correct answer ✔✔The "manipulative or deceptive device [s] or
contrivance [s]" prohibited
Misappropriation theory - correct answer ✔✔a legal principle that outlaws trading based on nonpublic
information received and used by a corporate outsider
"Material" information - correct answer ✔✔information for which there is a substantial likelihood that a
reasonable investor would consider it important in making investment decisions, or information that is
reasonably certain to have a substantial effect on the price of a company's securities.
U.S. v. Baghat (2006) - correct answer ✔✔Defendant's convictions for insider trading, for securities
tipping, and for obstructing the course of an SEC investigation is affirmed over claims of error regarding
constructive amendment or material variance, jury instruction, and sufficiency of the evidence.
Vicarious liability - correct answer ✔✔a legal rule that holds a person or company responsible for actions
committed by others or by their employees
Agency - how formed, types of, characteristics of relationship - correct answer ✔✔a legal arrangement
where one party (the agent) acts on behalf of another party (the principal)1. The elements and
characteristics of an agency relationship include234:
Consent by the principal and the agent to the relationship
Action by the agent on behalf of the principal
Control by the principal over the agent's actions
Honesty, clear and measurable assessments, and a customized experience for the principal
A spirit of collaboration and continual evolution of the customer story
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