Rico Does Not Work for Street Bikes Company, but Wrongfully

question 8

Multiple Choice

Rico does not work for Street Bikes Company, but wrongfully obtains inside information concerning the firm. Based on the information, Rico buys and sells Street Bikes stock for personal gain. The Securities and Exchange Commission prosecutes Rico, arguing that he is liable because he stole information rightfully belonging to another. This argument is​

• A) ​the blue-sky theory.
• B) ​the misappropriation theory.
• C) ​the free-writing prospectus theory.
• D) ​the tipper/tippee theory.

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Definitions:

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Time Value

The principle that having money now is more valuable than the same sum in the future because of its ability to earn more over time.

Money

A medium of exchange that facilitates the transfer of goods and services and serves as a measure of value and a store of wealth.

Interest

The cost of borrowing money or the payment received for the lending of resources, typically expressed as a percentage rate over a period of time.