Abby Is a Stock Broker for a Large Financial Services

question 60

True/False

Abby is a stock broker for a large financial services company.A client who works at Sixth Generation Software,Ltd. ,just called to purchase several thousand shares of his company's stock.He reveals to her that the company is about to announce the appointment of a new CEO.Abby asks her client if this information is public knowledge.The reason she asks is to make certain that her client,her company,and she remain in compliance with Regulation FD,the Fair Disclosure rule.
The SEC (Securities and Exchange Commission),the organization that monitors all publicly traded companies created Regulation FD,the fair disclosure rule,which says that companies that release any information must share it with everyone,and not just a few.Everyone has the same opportunity to use the information to make financial decisions.

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Definitions:

Common Stock

Represents ownership shares in a corporation, giving shareholders voting rights and a residue claim on corporate earnings in the form of dividends.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to investors, which are reinvested in the business.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenues.

Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.