Fact Pattern 27-2

question 61

Multiple Choice

Fact Pattern 27-2
Dhani,an accountant for Eureka,Inc. ,learns of undisclosed com?pany plan?s to market a new laptop.Dhani buys 1,000 shares of Eureka stock.He re?veals the company plans to Fay,who buys 500 shares.Fay tells Geoff,who tells Hu.Both Geoff and Hu buy 100 shares.They know that Fay got her informa?tion from Dhani.When Eureka publicly an?nounces its new laptop,Dhani,Fay,Geoff,and Hu sell their stock for a profit.
-Refer to Fact Pattern 27-2.Under the Securities Ex?change Act of 1934,Hu is most likely

• A)liable for insider trading.
• B)not liable because Hu is only a tippee,not a tipper.
• C)not liable because Hu is too far down the chain of disclosure.
• D)not liable because Hu traded on the basis of a true fact.

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Definitions:

Wage Bracket Withholding Table

A reference table used by employers to determine the amount of tax to withhold from an employee's paycheck based on their earnings and filing status.

Obsolescence

Obsolescence refers to the process of becoming outdated or no longer used, often due to the introduction of newer and more effective products, technologies, or processes.

Plant Assets

Long-term tangible assets used in the operating activities of a business, such as buildings, machinery, and equipment.

Salvage Values

The estimated residual value of an asset at the end of its useful life, reflecting what it can be sold for.