chp 8 - mock exam

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What type of approach involves rules laid down by law, making breaking them a criminal offense?

Self-regulation

Global standardization

International cooperation

Statutory approach (correct)

Which organization designs objectives and standards used as international benchmarks for all securities markets?

International Organization of Securities Commissions (IOSCO) (correct)

International Monetary Fund (IMF)

World Trade Organization (WTO)

United Nations (UN)

What caused the development of self-regulation according to the text?

Need for market participants to set rules (correct)

Need for improved and common standards

Disputes settlement mechanism

Need for international cooperation

What was one of the main functions fulfilled by stock exchanges in addition to providing a secondary market for shares?

Setting rules for its members Signup and view all the answers

In what form were disputes settled readily due to the need for rules in financial markets?

Through self-regulation mechanisms Signup and view all the answers

What is one of the main reasons why effective capital and financial markets are considered essential in economies?

To fuel economic development Signup and view all the answers

What is one of the key benefits of regulatory frameworks in financial markets?

Boosting confidence and trust in markets Signup and view all the answers

Why do regulatory bodies assess applicants for authorization based on being 'fit and proper'?

To determine their suitability to operate in the industry Signup and view all the answers

How do regulations in the financial sector contribute to reducing financial crime?

By making financial systems challenging for criminals to exploit Signup and view all the answers

In the context of financial regulations, what is meant by 'principles-based systems'?

Systems that focus on moral principles Signup and view all the answers

What is the purpose of European regulators cooperating to coordinate activities through the European Securities and Markets Authority (ESMA)?

To introduce pan-European regulation that standardizes the approach to financial services provision Signup and view all the answers

How do Asian securities regulations compare to those in other parts of the world?

They are increasingly similar to the models adopted in most other parts of the world Signup and view all the answers

In what way do Middle Eastern regulators adapt regulatory practices from countries like the UK and Australia?

By taking examples of best practices from countries like the UK and Australia and customizing them for local markets Signup and view all the answers

What is typically expected of regulators in terms of objectives from governments?

To be given a set of objectives by governments, aligning with national goals Signup and view all the answers

How do most countries in the world relate to IOSCO's principles of securities regulation?

They are usually members of IOSCO and subscribe to its principles Signup and view all the answers

What is the primary purpose of the layering stage in a money laundering operation?

To move the money around to make it difficult to trace Signup and view all the answers

During the integration stage of money laundering, what is the ultimate goal?

To hold legitimate funds that appear clean Signup and view all the answers

How do firms help in combating money laundering according to AML provisions?

By keeping adequate records and reporting suspicions Signup and view all the answers

What does 'Placement' refer to in a money laundering operation?

Placing criminally derived cash into an account Signup and view all the answers

Why are AML provisions important for identifying suspicious activities?

To ensure firms keep adequate records and report suspicions Signup and view all the answers

What criteria need to be met to find someone guilty of insider dealing?

The person must possess specific inside information that has not been made public Signup and view all the answers

What type of information is generally considered as 'inside information' related to securities?

Specific, precise, and not yet made public information Signup and view all the answers

Why is trading securities based on inside information prohibited in most markets?

To prevent unfair advantages and market manipulation Signup and view all the answers

What term is commonly used to describe non-public information that could significantly impact securities' prices if disclosed?

Published price-sensitive information Signup and view all the answers

How does a person usually acquire public information according to the text?

By analyzing published accounts or conducting research Signup and view all the answers

What defines an individual as having price-sensitive information as an insider, according to the text?

Acquiring information through employment, office, or profession related to the company Signup and view all the answers

In the context of insider trading, when does a violation occur?

When an insider sells securities based on undisclosed price-sensitive information Signup and view all the answers

Which of the following is NOT considered a type of security under insider trading regulations?

Commodities like agricultural products Signup and view all the answers

Under what circumstances can insider trading occur according to the text?

When insiders trade securities with unpublished price-sensitive information Signup and view all the answers

What is one critical characteristic of securities covered by insider trading rules?

Encompassing contracts for difference based on shares, interest rates, or indices Signup and view all the answers

What is a key obligation for directors and senior executives with regular access to inside information, according to the text?

Prepare and maintain insider lists Signup and view all the answers

What actions constitute market manipulation?

Disseminating false or misleading signals about financial instruments Signup and view all the answers

In the context of insider trading regulations, what behavior is considered market manipulation?

Creating artificial price levels for financial instruments Signup and view all the answers

What is a key requirement for individuals with regular access to inside information regarding account transactions?

Notify the issuer and regulator of account transactions Signup and view all the answers

What can be considered market manipulation behavior based on the activities described in the text?

Disseminating false signals likely affecting financial instrument prices Signup and view all the answers

What is the primary difference between market abuse and insider dealing as per the text?

Market abuse can involve various behaviors that unfairly disadvantage financial investors, while insider dealing specifically involves using inside information for trading. Signup and view all the answers

How does the concept of 'insider dealing' differ from 'market manipulation' in terms of regulatory measures?

Insider dealing involves using inside information for trading, whereas market manipulation involves influencing market prices through deceptive practices. Signup and view all the answers

What role does the concept of 'public disclosure requirements' play in preventing market abuse?

It mandates issuers to inform the public quickly about inside information directly concerning them, reducing the chances of abuse. Signup and view all the answers

How does the UK regulator determine 'insider dealing' based on a person's actions?

By assessing whether the person has recommended or induced another based on inside information. Signup and view all the answers

Which statement best describes the regulatory consequences of engaging in market abuse?

Market abuse can lead to civil penalties and fines imposed by regulators. Signup and view all the answers