Which of the Following Was Not a Flaw Found in LJM1

question 1

Multiple Choice

Which of the following was not a flaw found in LJM1 arrangements?

• A)Profits were improperly recorded on treasury shares used or sheltered by non-existing hedges
• B)Enron was hiding employee stock option expense
• C)Enron was hedging itself
• D)Enron had to advance treasury shares to buy them back at preferential rates
• E)Enron officers and their helpers benefited

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Definitions:

Consumption Bundle

A combination of goods and services that a consumer chooses to consume within a given time period.

Income

Funds acquired regularly as earnings from employment or investment returns.

Substitution Effect

The change in consumption patterns due to a change in relative prices, holding the consumer's utility level constant.

Income Effect

The change in an individual's consumption choices resulting from a change in real income, due to changes in price.