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Which of the Following Statements Is True

Question 7

Multiple Choice

Which of the following statements is true?


A) It is better for shareholders if management errs on the side of conservatism when reporting its earnings.
B) Laws preventing insider trading are in the best interest of the external shareholders of the firm.
C) Insider trading is always illegal, but there are legal ways in which management may manipulate the earnings it reports.
D) Both insider trading and earnings manipulation may be either legal or illegal, depending on whether certain guidelines are followed.

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