Asked by Samantha Batchelder on Apr 29, 2024
Verified
Eli, an officer for Food Stores Inc., buys 10,000 shares of its stock. One week later, the company announces that it will merge with a competitor, Grocery Mart Corporation, and the price of Food Stores' stock increases. One month later, Eli sells his shares for a profit. Under Section 16(b) of the Securities Exchange Act of 1934, Eli would not be liable if, after buying the stock, he had waited
A) less than fourteen days to sell it.
B) more than six months to sell it.
C) ninety days to sell it.
D) two months to sell it.
Securities Exchange Act
A U.S. law governing the trading of securities, aimed at protecting investors through transparency and fairness.
- Understand the significance and impact of insider trading laws.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
B
Explanation :
Under Section 16(b) of the Securities Exchange Act of 1934, insiders (like officers of the company) are required to return any profits made from buying and selling the company's stock within a six-month period. Therefore, Eli would not be liable if he had waited more than six months to sell the stock.
Learning Objectives
- Understand the significance and impact of insider trading laws.
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