WPCo [G\Hh|QlTRRb9#|+`FXb6 {IJWz/I~3%tmrnahL>qtu}~Zn IrC<سn6%scF6MFGC'}G煚Z>3lJb(ֶɆ/sKdw;M xcO.[fpVoLk5>rbJUkIN/ece{&!clJ(EBq̜-ΉqƲRmF,%D\ԃdi;Dqk 1Cv& .RI{0.98#VU(L@W ʕC7Cz)SCS% W{5=OBRSC*g *[[q̝g3%%\>)SlU. %n 0x BA #^ ^  UN+  y y  d " U T A!Q )Nw4 mU N* 0x   AS 0 0c 0D D3<H  9`(CourierXH  9`(Courierx  @;@(P/$  7Xd7   dHP DeskJet 820C Series Printer,(,,,,,(0E* (9 Z6Times New Roman Regular0<  9p`(<9p`+2Courier 10RomanSpeedozNxxx,,XxU^3s4ddd,,d<  9p`(MCITojamaPrezKonfusion#|xu"BIP[r?=//Nh &@FR@FL .Zl*Ã OU(9 Z6Times New Roman Regular(m3FP$ /!  8dd8    Riker WorfKlingonLangevoort YallChokaBridgwareMacrohardHfghikE<<CLevel 1Level 2Level 3Level 4Level 5(m3FP$ /!  8dd8   (m3FP$ /!  8dd8   ($$   1  'dxd /!  8 Gdd8   _XXXX8XXdd8%  @jj   XXINVESTMENTCOMPANIESANDINVESTMENTADVISERS#XX  #Ԉ   @*  ProfessorBradford ( @,,Monday,April30,2001  @vv&9:00a.m.   @ 3Hoursand25Minutes    @$INSTRUCTIONS `  @` ` ( PLEASEREADBEFOREPROCEEDING! ) L     1.Thisisanopenbookexam. XXXXԀYoumayusethecasebook,thestatutorysupplement, (x  yournotes,outlines,andanyothermaterialsyouwishtouse.#XXX X=# XXXXYoumaynotconsultwithor d  communicatewithanyotherpersonduringthisexam.#XXX X # P    2.Youhave threehoursandtwentyfiveminutes(3:25) tocompletetheexam.The ( timeatwhichtheexamendswillbepostedontheblackboard.Writinganythingaftertimeis  calledisanHonorCodeviolation.Youmaynotevenfinishawordorsentence.   XXXX  3.Ifyoufinishtheexammorethanfiveminutesearly,youmayturninyouranswersin  theDean'sOffice.Otherwise,youmustturninyouranswersinthisroom!regardlessofwhere x youtaketheexam.#XXX X# d   4.Thisexamhas six(6)pages ,includingtheinstructions.Thepagenumbersappearon < thetoprighthandcornerofeachpage.Pleaseverifythatthiscopyhasallthepages. ,|   5.Theexamconsistsof four(4)questions .Therecommendedtimeforeachquestionis T asfollows: D   Question1............................50Minutes  Question2............................40Minutes   Question3............................50Minutes ! Question4............................65Minutes "  Eachquestionwillbeweightedinaccordancewithitsrecommendedtime. h$" 1(# CONTINUETOTHENEXTPAGE.  )@%(  XXXX  6.Youmaytaketheexaminthisroomorinadesignatedspecialpurposeroom(typingor d overflowroom)postedontheboard.Ifyoudecidetotaketheexaminaspecialpurposeroom, P rememberthat(1)timewillbecalledonlyinthisroom,and(2)whentimeiscalled,youmust < eitherbepresentinthisroomorhavealreadyturnedinyouranswers. (  #XXX X #  7.Beclear.Beconcise.Beorganized.Useyourbrainbeforeyouuseyourpen.     8.Pleasewritelegibly.IcantgiveyoucreditforwhatIcantread.  t   9. XXXXThisexamwillrequireyoutointerpretandapplymanyofthestatutoryprovisionsand L  regulationswehaveexamined. DONOTJUSTSTATEGENERALPRINCIPLES.CITE 8  THERELEVANTSECTIONSANDSUBSECTIONSOFTHESTATUTESAND (  REGULATIONSANDEXPLAINHOWTHOSEPROVISIONSAPPLYTOTHEFACTS x  OFTHEQUESTION.  d  #XXX X #  10.Ifyoubelieveadditionalfactsarenecessarytoansweraquestion,stateexactlywhat <  thosefactsareandhowtheywouldaffectyouranswer.Ifyoubelieveaquestionisambiguousor ( unclear,notetheambiguityorlackofclarityandindicatehowitaffectsyouranswer.    11.Thequestionsshouldbeansweredinbluebooks,orontypingpaperifyoutypeyour  exam.Pleasewriteortypeononlyonesideofeachpage.Doublespaceifyoutype. WRITE t YOUREXAMIDENTIFICATIONNUMBERONEACHBLUEBOOKORPIECEOF d TYPINGPAPERTHATYOUUSE .Donotputyournameonanymaterialsyouturnin. P   12.TheHonorCodeisineffect. ,   13.Goodluckandhaveagreatsummer. h  DONOTTURNTHISPAGEUNTILYOUAREGIVENTHESIGNALTOSTART.  &P #   QUESTIONONE  d (50Minutes) <     BarryBond( Bond)isastockbroker.Bondalsoteachesaseminaratthelocal   communitycollege,TerribleTech( Tech).ThetitleofBondsseminaris WinningBig:Howto   InvestYourMoneySuccessfully.Bonddoesnotteachtheseminareverysemester,justwhen  t Techthinksstudentinterestwillbehigh,usuallywhenthestockmarketisveryactive.Bondhas  ` taughttheseminarfourofthelasteightsemesters.Hereceives$20perstudentforteachingit. L  Bondnevermakesmorethanafewhundreddollars,buthereallyisntteachingthecourseforthe 8  money,justbecausehelovesdoingit. $    Intheseminar,Bondteachesstudentsaboutdifferentcategoriesofinvestments,including `  varioustypesofsecurities.Hediscussestherisksandreturnsofdifferentinvestments,andthe L  suitabilityofeachinvestmentfordifferenttypesofinvestors.Heoftendiscusseswhat 8  hypotheticalinvestorsinvestmentportfoliosshouldlooklike.Sometimes,heuseshisstudentsas $ examplesinsteadofhypotheticalcases.Itisalso___common_Ԁforstudentstodiscusstheirpersonal  investmentneedswithBondafterclass.Bondrealizeshesgivingthemfreeadvice,buthe  believesapplyingthematerialtothemselveshelpsthemlearn.    DiscusswhetherBondisaninvestmentadviserwithinthemeaningoftheInvestment \ AdvisersActof1940.  H   QUESTIONTWO  d (40Minutes) <     IdiotInvestmentCompany( Idiot)isaninvestmentcompanyregisteredpursuanttothe   InvestmentCompanyAct.ItsinvestmentadviserisAdviserCorporation( Adviser)andits   principalunderwriterisUnderwriter,Inc.( Underwriter).Idiothasafivepersonboardof  t directors.ThedirectorsareLarryFine( Larry),MoHoward( Mo),CurlyHoward( Curly),  ` HristoStoitchkov( Hristo),andWarrenWaxit( Waxit). L    Larry,Mo,andCurlyareemployeesofAdviser.Waxitisaprominentlocalbusinessman $  whoistotallyunrelatedtoIdiot,Adviser,orUnderwriter.Idiotsfifthdirector,Hristo, XXXXhasno t  otherdirecttiestoIdiot,Adviser,orUnderwriter.#XXX X{#ԀHristosfatherisdead.Hismother,Edna `  Stoitchkov( Edna),isnowmarriedto_Franz_Beckenbauer_Ԁ( Franz)____._Ԁ_Franzs_Ԁemployer,Ed L  Employer( Employer)owns28%ofIdiotsvotingstock. 8    DiscusswhetherthecompositionofIdiotsboardviolatestheInvestmentCompanyActof  1940.     QUESTIONTHREE  d (50Minutes) <     AlphaCorporation( Alpha)andBetaCorporation( Beta)arebothregistered,open   endinvestmentcompanies.Theysharethesameinvestmentadviser,Adviser,Inc.( Adviser),   butareotherwiseunrelated.Theyhavenocommondirectors,officers,oremployees.  t   OnApril15,Betaagreedtobuy2.5percentofAlphasoutstandingvotingstock.Beta L  didnothavesufficientcashtomakethepurchase,andBetadidnotwanttoliquidateanyofits 8  longterminvestments,soBetaborrowedhalf()ofthepurchasepricefromabank.Thebank $  wasconcernedaboutrepaymentbecausetheamountoftheloanwas3percentofthevalueof t  Betastotalassets.Toconvincethebanktomaketheloan,Alphaguaranteedrepaymentof `  Betasdebt. L    BetaisnottheonlyinvestmentcompanythatownsAlphasstock;tenotherinvestment $ companiesownacombinedtotalof8percentofAlphasstock.However,Betas2.5%stakein  Alphaisgreaterthanthatofanyoftheotherinvestmentcompanies. XXXXԀBetadoesnotownanyother  investmentcompanystock.#XXX X&#    DiscusswhetherBetaspurchaseofAlphastockviolatessections12(d)(1)or17ofthe \ InvestmentCompanyAct.(Ifyoubelievetherearemultipleviolations,discusseachpossible H violation.)  4   QUESTIONFOUR  d (65Minutes) <     UNO,Inc.( UNO)isaDelawarecorporationwith150extremelywealthyshareholders.   Eachshareholderhasinvestedatleast$5millioninUNO.     UNOisaholdingcompany,owningthestockofanumberofothercompanies.Itowns  ` 25percentofDOSCorporation( DOS),butonly3to10percentofalltheothercompaniesin L  whichitisinvested.Allof_the_Ԁcompanies_UNOownsexcept_ԀDOSaremanufacturers.Thevalue 8  oftheDOSstockis_lessthan5_ԀpercentofthevalueofUNOstotalassets. $    DOSisaNewYorkcorporationwith76shareholders.UNOowns25percentof_DOSs_ `  stock;theremainderisownedby75individuals,whoown1percenteach.These75individuals L  havetotalassetsaveragingabout$2millioneach,includingthevalueoftheirDOSstock. 8    DOSowns95%ofthestockofApple,Inc.( Apple),afruitjuicemaker,60%ofthe  stockofasmallfishprocessingcompany,CodCorporation( Cod),and10%ofthestockofa  yogurtmaker,Yogurt,Inc.( Yogurt).DOSalsoownsfederallyinsuredcertificatesofdeposit  andU.S.governmenttreasurybonds.DOShasnodirectoperationsofitsown. p   DOSstotal assets haveavalueof$55million,brokendownasfollows: H    ` Applestock:$10million(18.2%ofDOSstotalassets) 8    ` Codstock:$5million(9.1%ofthetotal) $    ` Yogurtstock:$25million(45.4%ofthetotal) t    ` Certificatesofdeposit:$10million(18.2%ofthetotal) `    ` Treasurybonds:$5million(9.1%ofthetotal) L   Lastyear,theseinvestmentsaccountedforthefollowingpercentagesofDOSs income : $!    ` Apple:20%0  "(#(#    ` Cod:5% #    ` Yogurt:25% #     ` _Certificatesofdeposit:25% $t!    ` Treasurybonds:25%. %`"   DiscusswhetherUNOand/orDOSareinvestmentcompanieswithinthemeaningofthe '8!$ InvestmentCompanyActof1940.(Donotdiscussanyotherissuesthesefactsmayraise.)