Harry Said to Marge, "I Have a Ring Once Owned

question 68

Multiple Choice

Harry said to Marge, "I have a ring once owned by Marilyn Monroe. Would you like to buy it for $500?" Marge pays for the ring, but the next day a friend tells her that Harry had recently purchased the ring at a local store. Marge enjoys wearing the ring and wears it constantly for twelve months. Finally, she goes to Harry and says, "Here is the ring you lied about. Give me my $500." Most likely Marge will:

• A) get her money back since Harry's statement was fraudulent.
• B) not get her money back since she should have investigated the facts about the ring more carefully.
• C) not get her money back since she is a good faith purchaser of merchandise.
• D) not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.

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Definitions:

Quick Ratio

A liquidity indicator that evaluates a company's ability to pay its current liabilities without relying on the sale of inventory, calculated as (current assets - inventory) / current liabilities.

Bad Debt Expense

Expense associated with estimated uncollectible accounts receivable.

DuPont Model

A financial analysis framework that breaks down return on equity into three components: profit margin, asset turnover, and financial leverage.