Fact Pattern 37-2

question 65

Multiple Choice

Fact Pattern 37-2
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 37-2. Regarding Sid's profits on the purchase and sale of Tech stock, under Section 16(b) of the Securities Exchange Act of 1934 Tech may recapture

• A) all of Sid's profits.
• B) half of Sid's profits.
• C) 10 percent of Sid's profits.
• D) none of Sid's profits.

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Definitions:

Sales

The total amount of goods or services sold by a company, serving as a primary source of revenue.

Net Income

A company's overall earnings following the deduction of all expenses and taxes from its gross income.

Average Collection Period

The average number of days it takes for a company to collect receivables from its customers, indicating the efficiency of its credit policies.

Discount Period

The time frame in which a buyer can pay less than the full amount due on an invoice if payment is made promptly, incentivizing early payment.