Suppose There Has Been Securities Fraud in the Preparation of Materials

question 391

Multiple Choice

Suppose there has been securities fraud in the preparation of materials sent to investors, who then lose money. Potentially, which of the following may be liable?

• A) directors of the company
• B) high-level officers of the company
• C) accountants, lawyers and other professionals who helped prepare the material
• D) directors of the company and high-level officers of the company
• E) directors of the company and high-level officers of the company and accountants, lawyers and other professionals who helped prepare the material

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Definitions:

Variable Costs

Costs that change in proportion to the level of goods or services a company produces.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and thus should not affect future economic decisions.

Average Fixed Cost

Is the fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced.

Marginal Cost

The cost associated with producing one additional unit of a product, which can vary depending on the level of production.