Under the Liability Provisions of Section 11 of the Securities

question 25

Multiple Choice

Under the liability provisions of Section 11 of the Securities Act of 1933, a CPA may be liable to any purchaser of a security for certifying materially misstated financial statements that are included in the security's registration statement. Under Section 11, a CPA usually will not be liable to the purchaser

• A) If there is contributory negligence on the part of the purchaser.
• B) If the CPA can prove due diligence.
• C) Unless the purchaser can prove privity with the CPA.
• D) Unless the purchaser can prove scienter on the part of the CPA.

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Definitions:

Basic Questions

Basic Questions in economics typically refer to the fundamental queries about what to produce, how to produce, and for whom to produce, guiding allocation of resources.

Market Failure

A scenario where the distribution of goods and services through a free market fails to achieve efficiency, typically resulting in a decrease in overall social welfare.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they can be used by everyone without diminishing availability to others, such as public parks and street lighting.

Price Mechanism

The system by which the prices of goods and services are determined in a free market, through the forces of supply and demand.