Chet Makes a Material Misrepresentation of Fact Regarding His Horse

question 55

Multiple Choice

Chet makes a material misrepresentation of fact regarding his horse to Rosalind while out riding one day. Later that day, Rosalind makes an offer to buy the horse which Chet accepts, without correcting his earlier misrepresentation of fact. In this case:

• A) Chet may avoid the contract.
• B) Rosalind may avoid the contract.
• C) either or both Chet or Rosalind may avoid the contract.
• D) neither Chet nor Rosalind may avoid the contract.

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Definitions:

Implicit Lease Rate

The interest rate assumed in the lease contract that equates the present value of the lease payments and any unguaranteed residual value to the fair value of the asset.

Capitalization

The process of recording an expenditure as an asset on the balance sheet, rather than an expense, allowing its cost to be expensed over time.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Return On Equity

A measure of a corporation's profitability that calculates how much profit a company generates with the money shareholders have invested.