A Shareholder Who Was Buying Additional Shares in Wayport,Inc

question 30

Multiple Choice

A shareholder who was buying additional shares in Wayport,Inc.,told the shareholder seller "he was not aware of any bluebirds of happiness in the corporation's world." However,at the time the buyer made the statement he was aware that the CEO had informed the board via e-mail of a patent sale by Wayport that meant that the corporation would receive net proceeds of $7.6 million and would increase its year-end cash position by 22%.Which of the following statements is correct?

• A)The statement was too general to constitute a basis for a 10(b) claim.
• B)The statement would need to contain numbers to be a material misrepresentation.
• C)The buyer has done nothing wrong unless he was the CEO or a member of the board.
• D)The seller has a 10(b) claim against the buyer.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Unit Variable Cost

The cost associated with producing one additional unit of a product, excluding fixed costs.

Price

Price is the amount of money charged for a product or service, or the sum of values that consumers exchange for the benefits of having or using the product or service.

Break-even Point

The level of production or sales at which total costs match total revenue, resulting in no profit or loss.