Fact Pattern 41-1B

question 3

Multiple Choice

Fact Pattern 41-1B
Sid, a director of Tech Software Company, learns that a Tech engineer has developed a new, exciting video game. Sid buys Tech stock and tells his friend Uri, who also buys Tech stock. When the new game is released three weeks later, Sid and Uri sell their stock for a big profit.
-Refer to Fact Pattern 41-1B. Under SEC Rule l0b-5, Sid would not be li?able if he had waited to buy Tech stock until

• A) after Sid told Uri of the new game.
• B) after Uri bought Tech stock.
• C) after the public release of the game.
• D) just before the game was released.

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Definitions:

Direct Cost

Expenses that can be directly traced to producing specific goods or services, such as raw materials and direct labor.

Indirect Cost

Costs not directly traceable to a specific product or project, such as utilities or rent.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profits.

Direct Manufacturing Cost

Costs that are directly attributable to the production of a specific product, including direct materials and direct labor.