The Accounting Firm of Gray & Co

question 9

Multiple Choice

The accounting firm of Gray & Co.did accounting work for both Regional Bank and Carter Electronics.Without Carter's knowledge or approval,Gray & Co.discussed Carter's financial problems with Regional Bank.In this situation,Gray & Co.

• A)breached a legal obligation to keep all client information confidential.
• B)breached a moral,but not a legal,obligation of confidentiality.
• C)did not breach any obligations to its clients.
• D)acted properly because it was protecting its client,Regional Bank,from possibly making an unwise loan to Carter Electronics.

Understand the concept of opportunity costs and its implications on individual behaviors.

Recognize the mechanisms used by markets to mitigate adverse selection and information asymmetry.

Identify market failures and government interventions aimed at correcting them.

Calculate and understand consumer surplus and producer surplus from transactions.

---

Definitions:

Unexpected Expenditures

Expenses that were not planned or budgeted for, often requiring immediate payment.

Risk-Averse

A description of an investor or decision-maker who prefers to minimize uncertainty or potential loss, favoring safer over riskier options.

Financial Intermediary

An institution that acts as a middleman between savers and borrowers, including banks, investment companies, and insurance companies.

Borrowing Funds

The act of obtaining resources, typically money, from another party with the agreement to return the principal amount along with interest or other charges.