The Most Important Exemption from the Prospectus Requirement Are the "Accredited

question 22

Multiple Choice

The most important exemption from the prospectus requirement are the "Accredited Investors" provisions in the Securities Act.Who are defined as Accredited Investors?

• A)banks and investment dealers.
• B)governments.
• C)individuals and their spouses owning net financial assets exceeding $1 million; and individuals who,either alone or with a spouse,have net assets of at least $5 million.
• D)banks,investment dealers and governments.
• E)All of these are accredited investors.

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, thus having a claim to a part of the company's assets and earnings.

Risk

The possibility of loss or injury, or the variability of returns associated with a given investment or financial activity.

Contributed Capital

The total value of cash or other assets that shareholders have given a company in exchange for stock, also known as paid-in capital.

Return on Assets

A financial ratio indicating the profitability of a company relative to its total assets, measuring how effectively a company uses its assets to generate earnings.