Any transaction that involves an investment of money in a common enterprise with profits to come solely from the efforts of others is deemed to be a(n)__________ and thus a security.
A) stock issuance
B) investment contract
C) secured sale
D) committed sale

Question

Quizplus · Accepted Answer

This statement refers to the Howey Test, which determines whether an investment contract is a security under US securities laws. The Howey Test identifies an investment contract as any investment of money in a common enterprise in which the investor expects to earn a profit solely from the efforts of others. This definition includes most forms of investment contracts and is not limited to stocks or secured sales. Therefore, the best choice is B, investment contract.

Any Transaction That Involves an Investment of Money in a Common