Sun CorpApproved a Merger Plan with Cord Corp

question 2

Multiple Choice

Sun Corp.approved a merger plan with Cord Corp.One of the factors that led to the approval of the merger was the fact that the Cord's financial statements were audited by Frank & Co.CPAs.Sun had engaged Frank to audit Cord's financial statements.While performing the audit,Frank failed to discover certain irregularities that later caused Sun to suffer substantial losses.For the lawsuit to be successful,Sun must prove that Frank & Co. ,CPAs ________.

• A)knew of the irregularities
• B)failed to exercise due care
• C)was grossly negligent
• D)acted with scienter

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Definitions:

No-par Common Stock

Shares issued without a par value, allowing the company more flexibility in setting their price.

Paid-in Capital

The total amount of capital that shareholders have contributed to a company in exchange for shares of stock.

Fair Market Value

The price that a willing buyer and a willing seller agree upon when both parties have reasonable knowledge of the relevant facts and neither is under compulsion to buy or sell.