The 1933 Securities Act Defines the Term "Security

question 37

Essay

The 1933 Securities Act defines the term "security." The courts have generally interpreted the statutory definition to include non-traditional forms of investments.The Supreme Court of the United States has adopted a two-tier analysis of what constitutes a security.Within this analysis the Court has used a three-part test to determine whether a non-traditional financial transaction constitutes an investment contract and thus a security.Explain: (a)the 1933 Act's statutory definition of security, (b)the courts' general interpretation of the 1933 Act's definition and (c)the Supreme Court's two-tier test.

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Definitions:

Financial Statements

Financial statements are written records that convey the business activities and the financial performance of a company, including balance sheet, income statement, and cash flow statement.

Net Income

Net income is the total profit of a company after all expenses and taxes have been subtracted from total revenue.

Hedge Accounting

Accounting techniques that modify the standard rules of accounting to recognize the offsetting effects on the financial statements of both the hedged item and the hedging instrument.

Mandatory

Required or obligatory; something that must be done or adhered to.