a) What is considered insider trading? Multiple Choice All of the other statements describe insider trading....

a) What is considered insider trading?

Multiple Choice

All of the other statements describe insider trading.
Marlene, an individual investor, buys shares in a company because her financial analysis of the company suggests that it is undervalued.
Bill buys shares after the company's earnings announcement because he personally knows the auditor who audited the company's earnings announcement / press release.
Chris, a hedge fund manager, purchases a 5% stake in a company because he wants to install his colleagues on to the company's board of directors.
Karen sells shares in a company before the earnings announcement because her brother-in-law, who's the CEO, said that EPS will fall short of market expectations.

b).

Which of the following statements is true about the classified income statement?

Multiple Choice

Income tax expense is subtracted from operating income to obtain pre-tax income.
Net income is computed by subtracting operating expenses from gross profit.
Cost of goods sold is the difference between net sales revenue and gross profit.
Gross sales revenue is the first line of the income statement; contra-revenues is the second line; and net sales revenue is the third line.
Dividend expense is classified as a non-operating (other) item on the income statement.

Expert Solution

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