Fact Pattern 20-3 Dhani,an Accountant for Eureka,Inc.,learns of Undisclosed Com-Pany Plan-S to Market

question 3

Multiple Choice

Fact Pattern 20-3
Dhani,an accountant for Eureka,Inc.,learns of undisclosed com-pany plan-s to market a new laptop.Dhani buys 1,000 shares of Eureka stock.He re-veals the company plans to Fay,who buys 500 shares.Fay tells Geoff,who tells Hu.Both Geoff and Hu buy 100 shares.They know that Fay got her informa-tion from Dhani.When Eureka publicly an-nounces its new laptop,Dhani,Fay,Geoff,and Hu sell their stock for a profit.
-Refer to Fact Pattern 20-3.If Dhani is liable under the Securities Ex-change Act of 1934,it will be because the infor-mation on which he based his purchase of Eureka stock was

• A)a forward-looking forecast.
• B)not material.
• C)not yet public.
• D)not yet true.

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Definitions:

Diagnosed

The process of identifying a disease or disorder by examining symptoms and performing diagnostic tests.

Cured

Completely remedied or healed from a disease or condition.

Internal Locus

The belief that one has control over life events and outcomes, as opposed to external forces having that control.

Self-serving Bias

The tendency to attribute positive events to one's own character but attribute negative events to external factors.