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Multiple Choice
Which of the following securities is exempt from registration under the Securities Act of 1933?
A
Corporate bonds issued by a private company
B
Preferred stock issued in an initial public offering (IPO)
C
Common stock of a publicly traded corporation
D
U.S. Treasury bonds
Verified step by step guidance
1
Understand the Securities Act of 1933: This act requires securities to be registered with the SEC unless they qualify for an exemption. Exemptions are typically granted to securities that are considered low-risk or issued by government entities.
Identify the characteristics of U.S. Treasury bonds: These are debt securities issued by the U.S. government to finance its operations. They are considered low-risk because they are backed by the full faith and credit of the U.S. government.
Review the exemption criteria under the Securities Act of 1933: Securities issued by the U.S. government, such as Treasury bonds, are explicitly exempt from registration requirements due to their low-risk nature and government backing.
Compare the other options: Corporate bonds issued by a private company, preferred stock in an IPO, and common stock of a publicly traded corporation do not meet the exemption criteria under the Securities Act of 1933. These securities typically require registration to ensure investor protection.
Conclude that U.S. Treasury bonds are exempt from registration under the Securities Act of 1933 because they are issued by the U.S. government and are considered low-risk securities.