Which One of the Following Is Most Apt to Be

question 31

Multiple Choice

Which one of the following is most apt to be considered insider trading?

• A)Amy overhears Mary say she is being promoted to accounts payables manager and then she purchases shares in Mary's employer.
• B)Jennifer compiles the financial statements and knows that net income for the latest quarter is significantly below analyst's forecasts but continues to hold shares of her employer's stock.
• C)Kathy is an outside auditor and has found what she believes are significant accounting irregularities in a company's financial reports but owns no shares in the firm.
• D)Lee buys stock in Winter's Wear after he overhears a conversation between the firm's president and vice-president concerning a proposed acquisition.
• E)Jeff buys shares of stock in his employer's firm through the company retirement plan on a regular monthly basis.

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Definitions:

Current Liabilities

Obligations or debts that a company is expected to pay off within one year or within its normal operating cycle.

Quick Ratio

A measure of a company’s ability to meet its short-term obligations using its most liquid assets, excluding inventory.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business’ normal operating cycle, whichever is longer.

Current Liabilities

Obligations that are due for payment within the next operating cycle or year, including accounts payable and short-term loans.