Which of the Following Practices Is Prohibited by the Insider

question 38

Multiple Choice

Which of the following practices is prohibited by the Insider Trading and Fraud Act of 1988?

• A) the use of nonpublic information to make profitable stock transactions
• B) selling of stock by officers of the company
• C) the granting of stock options to corporate executives in lieu of salaries
• D) private sales of stock between executives of the company

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Definitions:

Discount Rate

A percentage used to calculate the present value of future cash flows or investments.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, discounting future amounts to their present values.

Annual Rate

Typically refers to the interest rate for a whole year, often applied in terms of loans, investments, or savings.

Invests

The act of allocating resources, usually money, with the expectation of generating an income or profit.