In the Ninth Circuit Court of Appeals Decision on SEC

question 4

Multiple Choice

In the Ninth Circuit Court of Appeals decision on SEC v. Murphy, all of the following were considerations in determining an offering to be a private placement except:

• A) there must be an arm's length relationship between the issuer of the security and the prospective purchaser
• B) the number of offerees must be limited
• C) the size and the manner of the offering must not indicate widespread solicitation
• D) the offerees must be sophisticated
• E) some relationship between the offerees and the issuer must be present

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Definitions:

Variable Costing

A costing method where only variable production costs are assigned to inventory and all fixed overhead costs are expensed in the period they are incurred.

Variable Production Costs

Costs that vary directly with the volume of production, including direct labor and materials.

Traceable Fixed Expense

Fixed costs that can be directly linked to a specific segment of the business, and would disappear if the segment did.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remains constant regardless of the level of production.