Which of the Following Statements About an SEC No-Action Letter

question 26

Multiple Choice

Which of the following statements about an SEC no-action letter is false?

• A)No-action letters state the SEC will not take legal action against the issuer if the issuer acts as indicated in the no-action letter.
• B)No-action letters are binding on the SEC commissioners.
• C)Issuers that comply with the no-action letters rarely face SEC action.
• D)Issuers often seek no-action letters before making exempted offerings of securities and excluding shareholder proposals from their proxy statements.

---

Definitions:

Fixed Costs

Costs that do not change with the level of production or business activity, such as rent, salaries, and insurance premiums.

Full-Service Contract

An agreement that provides a complete range of services related to a specific product, property, or activity, including maintenance, repairs, and often replacements.

Profit

The financial gain achieved when the revenue from business activities exceeds the expenses, costs, and taxes involved in maintaining the operation.

Operating Loss

A financial metric representing the negative balance resulting from a company's operating expenses exceeding its revenues.