What Distinguishes Fraud from Misrepresentation

question 19

Multiple Choice

What distinguishes fraud from misrepresentation?

• A) In fraud, the victim surrenders something of value to the tortfeasor, which may not necessarily occur with misrepresentation.
• B) Fraud includes the intent to deceive the victim, but misrepresentation can occur even if the tortfeasor is unaware of the falsehood of his or her statements.
• C) Fraud is also a crime, but misrepresentation is only a tort.
• D) There is no distinction; they are interchangeable torts.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company.

Semiannual

Occurring twice a year or every six months.

Effective Interest Method

An accounting method for calculating the interest income or expense on a bond or loan to reflect the actual economic rate over the financial instrument's expected life.

Interest Expense

An expense incurred from borrowing money, represented as the cost of interest for the borrowed funds.