Companies That Continue to Act Unethically (Especially in the Area

question 222

Multiple Choice

Companies that continue to act unethically (especially in the area of accounting) will most likely

• A)have their shares appreciate in value because shareholders like aggressive accounting practices which help increase the price of their stock.
• B)have their shares depreciate in value as shareholders become concerned with aggressive accounting practices which distort a company's real financial condition.
• C)never be able to sell shares of stock to the public.
• D)find that their share price will be unaffected by this practice.
• E)No pattern is evident.

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Definitions:

Collude

To engage in a secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others.

Perfectly Competitive

A market structure characterized by many buyers and sellers, freedom of entry and exit, homogeneous products, and perfect information.

Marginal Cost

The alteration in the overall cost of production that occurs with each additional unit produced.

Total Revenue

The amount a firm receives for the sale of its output.