Mays Bought McCovey Corp

question 2

Multiple Choice

Mays bought McCovey Corp.common stock in an offering registered under the Securities Act of 1933.Hart & Co.,CPAs,gave an unqualified opinion on McCovey's financial statements that were included in the registration statement filed with the Securities and Exchange Commission.Mays sued Hart under the provisions of the 1933 Act that deal with omission of facts required to be in the registration statement.Mays must prove that:

• A)There was fraudulent activity by Hart.
• B)The financial statements contained a material misstatement.
• C)Mays relied on Hart's opinion.
• D)Mays was in privity with Hart.

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Definitions:

Tax Shelters

Investment strategies or financial arrangements used to minimize tax liabilities, often by deferring or reducing taxable income.

Return on Assets

A financial ratio that indicates the profitability of a company relative to its total assets.

Return on Debt

A measure of a company's profitability relative to its total debt, indicating how effectively a company is using its borrowed funds.