Which of the Following Practices Is Prohibited by the Insider

question 38

Multiple Choice

Which of the following practices is prohibited by the Insider Trading and Fraud Act of 1988?

• A) the use of nonpublic information to make profitable stock transactions
• B) selling of stock by officers of the company
• C) the granting of stock options to corporate executives in lieu of salaries
• D) private sales of stock between executives of the company

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Definitions:

Compensating Balance

A minimum bank account balance that a borrower must maintain as a condition for some types of loans and lines of credit.

Effective Annual Interest Rate

The interest rate that is adjusted for compounding over a given period. Essentially, it reflects the total interest that will be paid or earned over a year, taking into account the effect of compounding.

Inventory Turnover Rate

A financial metric measuring how often a company's inventory is sold and replaced over a period.

Sales

The total amount of goods or services sold within a specific time frame, indicating the performance and growth of a business.