The Primary Purpose of the Foreign Corrupt Practices Act of 1977

question 47

Multiple Choice

The primary purpose of the Foreign Corrupt Practices Act of 1977 was

• A)to require corporations to maintain a good system of internal control.
• B)to prevent the bribery of foreign officials by American companies.
• C)to require the reporting of any material fraud by a business.
• D)All of the above are required by the act.

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Definitions:

Bankers' Acceptance

A short-term debt instrument issued by a company that is guaranteed by a commercial bank, commonly used in international trade.

Securitization

The process whereby financial instruments that were previously thinly traded are converted to a form that creates greater liquidity. Securitization also applies to the situation where specific assets are pledged as collateral for securities, and hence asset-backed securities are created. One example of the former is junk bonds; an example of the latter is mortgage-backed securities.

Warrants

Financial instruments that give the holder the right, but not the obligation, to buy shares of a stock at a specified price before the warrant expires.

Convertibles

Securities, such as bonds or preferred shares, that can be converted into a specified number of common shares at the holder's discretion.