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:

Average Fixed Cost

Fixed production charges (remaining constant irrespective of output size) partitioned by the amount of production.

Average Total Cost

Average total cost is the total cost of production divided by the total quantity produced, representing the cost per unit of output produced.

Marginal Cost

The increase in total cost that arises from an extra unit of production, which is crucial for decision-making on the quantity of production and pricing.

Total Cost

Total cost is the complete amount of money it takes to produce a good or service, including both fixed and variable costs.