The Prudent Man Law Requires _________

question 90

Multiple Choice

The prudent man law requires _________.

• A) executives of companies to avoid investing in options of companies by which they are employed
• B) executives of companies to disclose their transactions in stocks of companies by which they are employed
• C) professional investors who manage money for others to avoid all risky investments
• D) professional investors who manage money for others to constrain their investments to those that would have been approved by the prudent investor
• E) none of these

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Definitions:

Life Expectancy

The average number of years an individual is expected to live, based on current mortality rates.

Production Costs

The total expenses incurred in the manufacturing of a product, including labor, materials, and overhead costs.

Short-run Economic Profits

Profits earned by a firm in the short run, where not all inputs can be varied and some fixed costs are still incurred.

Competitive Industries

Sectors of the economy where businesses actively compete with each other to offer goods or services to consumers, often characterized by low barriers to entry and a high level of innovation.