The Cost of the Time Managers Spend on an Issue

question 34

Multiple Choice

The cost of the time managers spend on an issue of securities is

• A)considered to be part of the abnormal return.
• B)a direct cost of the issue and must be reported on the prospectus.
• C)reimbursed when the issuer invokes the Green Shoe option.
• D)an indirect expense of the issue.
• E)not considered an expense of the issue because it is a sunk cost.

---

Definitions:

Strict Product Liability

Liability under which, courts may hold the manufacturer, distributor, or retailer liable for any reasonably foreseeable injured party.

Negligence Per Se

A legal doctrine where an act is considered negligent because it violates a statute or regulation.

Breach of Warranty

The failure to fulfill the terms of a promise or claim made regarding the quality or nature of a product or service.

Product Liability Lawsuit

A legal claim brought against a manufacturer, distributor, or seller for damages or injuries caused by a defective or dangerous product.