Exam Bank for Fraud Examination 6th Edition By
W. Steve Albrecht (Answers with Rationale)
Chapter 01
Multiple Choice
1. One way that criminal law differs from civil law is that it:
a. provides remedies for violations of private rights.
b. must yield a unanimous verdict.
c. can have a jury of fewer than 12 persons.
d. allows for various claims in one action.
ANSWER: b
RATIONALE: a. Incorrect. This is a
characteristic of civil law; criminal law deals with crimes against the public.
b. Correct. Criminal trials must result in a unanimous verdict.
c. Incorrect. This is a characteristic of civil law; criminal trial juries must have 12
persons.
d. Incorrect. This is a characteristic of civil law; criminal law permits only one claim at a
time.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
2. Which of the following is NOT an element of a Ponzi scheme?
a. Gaining other's confidence.
b. Promising abnormally high returns.
c. Collected money is invested.
d. Investment principle is partially used to make payments to previous investors.
ANSWER: c
RATIONALE: a. Incorrect. This is one of the most important elements of the “con.”
b. Incorrect. This is how fraudsters lure in investors.
c. Correct. This is very unlikely.
d. Incorrect. The original principle is often used to make interest payments.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
,Chapter 01
3. The following are all elements of Title 26, U.S. Code Section 7201 EXCEPT:
a. not reporting bribe income may be grounds for being charged with tax evasion.
b. filing income tax that excludes income from fraud may be considered an improper tax filing.
c. bribes paid may be deducted as business expenses.
d. failure to report income from fraud may be grounds for being charged with tax evasion.
ANSWER: c
RATIONALE: a. Incorrect. Not reporting bribe income may be grounds for being charged with tax
evasion.
b. Incorrect. Filing income tax that excludes income from fraud may be considered an
improper tax filing.
c. Correct. Bribes cannot be deducted as legitimate business expenses.
d. Incorrect. Failure to report income from fraud or bribes may be prosecuted as tax
evasion.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
4. Which one of the following is NOT a characteristic of a criminal proceeding?
a. Deals with offenses against society.
b. Consequences include restitution and damage payments.
c. Jury of 12 individuals.
d. Only one claim may be heard at a time.
ANSWER: b
RATIONALE: a. Incorrect. A crime is considered an offense against society.
b. Correct. In a criminal proceeding, the consequences are jail and/or fines.
c. Incorrect. A criminal jury consists of 12 jurors.
d. Incorrect. Only one claim is heard at a time, whereas in a civil case many claims may
be joined into one action.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 2
,Chapter 01
5. Management fraud is often referred to as:
a. stockholder fraud.
b. financial statement fraud.
c. employee fraud.
d. investment fraud.
ANSWER: b
RATIONALE: a. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
b. Correct. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
c. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
d. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
6. What is required to prove fraud, as opposed to negligence?
a. Gross error
b. Intent
c. Preponderance of the evidence
d. Confession from the perpetrator
ANSWER: b
RATIONALE: a. Incorrect. Gross error is not sufficient evidence to prove fraud.
b. Correct. To succeed in a criminal or civil prosecution, it is usually necessary to show
that the perpetrator acted with intent to defraud the victim.
c. Incorrect. This is what is proven in a civil case.
d. Incorrect. Confession is not required to prove fraud. In fact, many perpetrators never
admit their guilt.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 3
,Chapter 01
7. Which of the following is the most common type of occupational fraud?
a. Management fraud
b. Mail fraud
c. Investment fraud
d. Employee embezzlement
ANSWER: d
RATIONALE: a. Incorrect. Employee embezzlement is the most common type of occupational fraud.
b. Incorrect. Employee embezzlement is the most common type of occupational fraud.
c. Incorrect. Employee embezzlement is the most common type of occupational fraud.
d. Correct. Employee embezzlement is the most common type of occupational fraud.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
8. Which of the following is NOT a characteristic of management fraud?
a. Top management deception
b. Manipulation of financial statements
c. Kickbacks or bribes
d. Pressure to earn year-end bonuses
ANSWER: c
RATIONALE: a. Incorrect. Management fraud often involves top management's deceptive
manipulation. Management fraud is when the top management deceives stockholders.
b. Incorrect. Management often uses the manipulation of financial statements to commit
fraud. This is one of the easiest ways to commit a large fraud.
c. Correct. These are examples of employee embezzlement. Management fraud usually
deals with financial statement manipulation.
d. Incorrect. Many managers commit fraud to receive large bonuses that are dependent
upon financial performance.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 4
,Chapter 01
9. Customer fraud includes all of the following EXCEPT:
a. getting something for nothing.
b. not paying for goods purchased.
c. receiving improper payments through collusion between buyers and vendors.
d. deceiving the organization into giving the customer something that it should not.
ANSWER: c
RATIONALE: a. Incorrect. This is an example of customer fraud.
b. Incorrect. This is an example of customer fraud.
c. Correct. This is an example of vendor fraud.
d. Incorrect. This is an example of customer fraud.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
10. Which of the following is a common example of vendor fraud?
a. Fraud perpetrated through collusion between buyers and vendors.
b. Fraud perpetrated by upper management.
c. The perpetrator physically removes the inventory from the business premises.
d. A fraud perpetrated through financial statement manipulation.
ANSWER: a
RATIONALE: a. Correct. Vendor fraud comes in two common forms: (1) fraud perpetrated by vendors
acting alone and (2) fraud perpetrated through collusion between buyers and vendors.
b. Incorrect. Vendor fraud comes in two common forms: (1) fraud perpetrated by
vendors acting alone and (2) fraud perpetrated through collusion between buyers and
vendors.
c. Incorrect. Vendor fraud comes in two common forms: (1) fraud perpetrated by
vendors acting alone and (2) fraud perpetrated through collusion between buyers and
vendors.
d. Incorrect. Vendor fraud comes in two common forms: (1) fraud perpetrated by
vendors acting alone and (2) fraud perpetrated through collusion between buyers and
vendors.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 5
,Chapter 01
11. Government agencies such as the FBI, FDIC, IRS, or various health agencies publish fraud statistics from time to
time. Which of the following observations concerning such statistics is true?
a. Generally, their statistics are complete.
b. Such information is rarely used.
c. They provide only those statistics related to their jurisdiction.
d. They usually provide a total picture in the areas for which they have responsibility.
ANSWER: c
RATIONALE: a. Incorrect. Government agencies only publish those statistics that are directly related
to their jurisdictions. As a result, their statistics are not complete and do not provide a
total picture of fraud—even in the areas for which they have responsibility.
b. Incorrect. Government agencies only publish those statistics that are directly related
to their jurisdictions. As a result, their statistics are not complete and do not provide a
total picture of fraud—even in the areas for which they have responsibility.
c. Correct. Government agencies only publish those statistics that are directly related to
their jurisdictions. As a result, their statistics are not complete and do not provide a total
picture of fraud—even in the areas for which they have responsibility.
d. Incorrect. Government agencies only publish those statistics that are directly related
to their jurisdictions. As a result, their statistics are not complete and do not provide a
total picture of fraud—even in the areas for which they have responsibility.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
12. Which legal code makes the bribing of public officials illegal?
a. Title 18, U.S. Code Section 201
b. Title 41, U.S. Code Section 51 to 58
c. Title 18, U.S. Code Section 1341
d. Title 18, U.S. Code Section 1344
ANSWER: a
RATIONALE: a. Correct. Title 18, U.S. Code Section 201 outlaws the bribing of public officials.
b. Incorrect. Title 18, U.S. Code Section 201 outlaws the bribing of public officials.
c. Incorrect. Title 18, U.S. Code Section 201 outlaws the bribing of public officials.
d. Incorrect. Title 18, U.S. Code Section 201 outlaws the bribing of public officials.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.1
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 6
, Chapter 01
13. Fraud has a direct dollar-for-dollar impact on a company's:
a. revenues.
b. net income.
c. profit margin.
d. stock price.
ANSWER: b
RATIONALE: a. Incorrect. Fraud does not have a dollar-for-dollar impact on revenues. It takes
significantly more revenues to cover the effect of the fraud on net income. Because
revenues don't include the business costs, and the fraud directly hits the bottom line,
ultimately, the fraud is much more expensive than it sounds.
b. Correct. Losses incurred from fraud reduce a firm's income on a dollar-for-dollar
basis. This means that for every $1 of fraud, the net income of the firm is reduced by
$1.
c. Incorrect. The profit margin is a percentage. It really tells the company how much
revenue the company must generate to recover the fraud losses. For example, if the
company has a 10% profit margin, and the fraud cost $436 million, the company would
have to generate $4.36 billion or (436 million/.1) to recover the costs of the fraud.
d. Incorrect. The stock price literally cannot drop by the amount of the fraud. If price
per share was $5 and the fraud was $100,000, then stock price could not drop below $0.
However, if the fraud is $100,000, the price per share multiplied by the number of shares
outstanding will probably drop considerably more than $100,000.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.1
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 7
W. Steve Albrecht (Answers with Rationale)
Chapter 01
Multiple Choice
1. One way that criminal law differs from civil law is that it:
a. provides remedies for violations of private rights.
b. must yield a unanimous verdict.
c. can have a jury of fewer than 12 persons.
d. allows for various claims in one action.
ANSWER: b
RATIONALE: a. Incorrect. This is a
characteristic of civil law; criminal law deals with crimes against the public.
b. Correct. Criminal trials must result in a unanimous verdict.
c. Incorrect. This is a characteristic of civil law; criminal trial juries must have 12
persons.
d. Incorrect. This is a characteristic of civil law; criminal law permits only one claim at a
time.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
2. Which of the following is NOT an element of a Ponzi scheme?
a. Gaining other's confidence.
b. Promising abnormally high returns.
c. Collected money is invested.
d. Investment principle is partially used to make payments to previous investors.
ANSWER: c
RATIONALE: a. Incorrect. This is one of the most important elements of the “con.”
b. Incorrect. This is how fraudsters lure in investors.
c. Correct. This is very unlikely.
d. Incorrect. The original principle is often used to make interest payments.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
,Chapter 01
3. The following are all elements of Title 26, U.S. Code Section 7201 EXCEPT:
a. not reporting bribe income may be grounds for being charged with tax evasion.
b. filing income tax that excludes income from fraud may be considered an improper tax filing.
c. bribes paid may be deducted as business expenses.
d. failure to report income from fraud may be grounds for being charged with tax evasion.
ANSWER: c
RATIONALE: a. Incorrect. Not reporting bribe income may be grounds for being charged with tax
evasion.
b. Incorrect. Filing income tax that excludes income from fraud may be considered an
improper tax filing.
c. Correct. Bribes cannot be deducted as legitimate business expenses.
d. Incorrect. Failure to report income from fraud or bribes may be prosecuted as tax
evasion.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
4. Which one of the following is NOT a characteristic of a criminal proceeding?
a. Deals with offenses against society.
b. Consequences include restitution and damage payments.
c. Jury of 12 individuals.
d. Only one claim may be heard at a time.
ANSWER: b
RATIONALE: a. Incorrect. A crime is considered an offense against society.
b. Correct. In a criminal proceeding, the consequences are jail and/or fines.
c. Incorrect. A criminal jury consists of 12 jurors.
d. Incorrect. Only one claim is heard at a time, whereas in a civil case many claims may
be joined into one action.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 2
,Chapter 01
5. Management fraud is often referred to as:
a. stockholder fraud.
b. financial statement fraud.
c. employee fraud.
d. investment fraud.
ANSWER: b
RATIONALE: a. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
b. Correct. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
c. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
d. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
6. What is required to prove fraud, as opposed to negligence?
a. Gross error
b. Intent
c. Preponderance of the evidence
d. Confession from the perpetrator
ANSWER: b
RATIONALE: a. Incorrect. Gross error is not sufficient evidence to prove fraud.
b. Correct. To succeed in a criminal or civil prosecution, it is usually necessary to show
that the perpetrator acted with intent to defraud the victim.
c. Incorrect. This is what is proven in a civil case.
d. Incorrect. Confession is not required to prove fraud. In fact, many perpetrators never
admit their guilt.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 3
,Chapter 01
7. Which of the following is the most common type of occupational fraud?
a. Management fraud
b. Mail fraud
c. Investment fraud
d. Employee embezzlement
ANSWER: d
RATIONALE: a. Incorrect. Employee embezzlement is the most common type of occupational fraud.
b. Incorrect. Employee embezzlement is the most common type of occupational fraud.
c. Incorrect. Employee embezzlement is the most common type of occupational fraud.
d. Correct. Employee embezzlement is the most common type of occupational fraud.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
8. Which of the following is NOT a characteristic of management fraud?
a. Top management deception
b. Manipulation of financial statements
c. Kickbacks or bribes
d. Pressure to earn year-end bonuses
ANSWER: c
RATIONALE: a. Incorrect. Management fraud often involves top management's deceptive
manipulation. Management fraud is when the top management deceives stockholders.
b. Incorrect. Management often uses the manipulation of financial statements to commit
fraud. This is one of the easiest ways to commit a large fraud.
c. Correct. These are examples of employee embezzlement. Management fraud usually
deals with financial statement manipulation.
d. Incorrect. Many managers commit fraud to receive large bonuses that are dependent
upon financial performance.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 4
,Chapter 01
9. Customer fraud includes all of the following EXCEPT:
a. getting something for nothing.
b. not paying for goods purchased.
c. receiving improper payments through collusion between buyers and vendors.
d. deceiving the organization into giving the customer something that it should not.
ANSWER: c
RATIONALE: a. Incorrect. This is an example of customer fraud.
b. Incorrect. This is an example of customer fraud.
c. Correct. This is an example of vendor fraud.
d. Incorrect. This is an example of customer fraud.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
10. Which of the following is a common example of vendor fraud?
a. Fraud perpetrated through collusion between buyers and vendors.
b. Fraud perpetrated by upper management.
c. The perpetrator physically removes the inventory from the business premises.
d. A fraud perpetrated through financial statement manipulation.
ANSWER: a
RATIONALE: a. Correct. Vendor fraud comes in two common forms: (1) fraud perpetrated by vendors
acting alone and (2) fraud perpetrated through collusion between buyers and vendors.
b. Incorrect. Vendor fraud comes in two common forms: (1) fraud perpetrated by
vendors acting alone and (2) fraud perpetrated through collusion between buyers and
vendors.
c. Incorrect. Vendor fraud comes in two common forms: (1) fraud perpetrated by
vendors acting alone and (2) fraud perpetrated through collusion between buyers and
vendors.
d. Incorrect. Vendor fraud comes in two common forms: (1) fraud perpetrated by
vendors acting alone and (2) fraud perpetrated through collusion between buyers and
vendors.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 5
,Chapter 01
11. Government agencies such as the FBI, FDIC, IRS, or various health agencies publish fraud statistics from time to
time. Which of the following observations concerning such statistics is true?
a. Generally, their statistics are complete.
b. Such information is rarely used.
c. They provide only those statistics related to their jurisdiction.
d. They usually provide a total picture in the areas for which they have responsibility.
ANSWER: c
RATIONALE: a. Incorrect. Government agencies only publish those statistics that are directly related
to their jurisdictions. As a result, their statistics are not complete and do not provide a
total picture of fraud—even in the areas for which they have responsibility.
b. Incorrect. Government agencies only publish those statistics that are directly related
to their jurisdictions. As a result, their statistics are not complete and do not provide a
total picture of fraud—even in the areas for which they have responsibility.
c. Correct. Government agencies only publish those statistics that are directly related to
their jurisdictions. As a result, their statistics are not complete and do not provide a total
picture of fraud—even in the areas for which they have responsibility.
d. Incorrect. Government agencies only publish those statistics that are directly related
to their jurisdictions. As a result, their statistics are not complete and do not provide a
total picture of fraud—even in the areas for which they have responsibility.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
12. Which legal code makes the bribing of public officials illegal?
a. Title 18, U.S. Code Section 201
b. Title 41, U.S. Code Section 51 to 58
c. Title 18, U.S. Code Section 1341
d. Title 18, U.S. Code Section 1344
ANSWER: a
RATIONALE: a. Correct. Title 18, U.S. Code Section 201 outlaws the bribing of public officials.
b. Incorrect. Title 18, U.S. Code Section 201 outlaws the bribing of public officials.
c. Incorrect. Title 18, U.S. Code Section 201 outlaws the bribing of public officials.
d. Incorrect. Title 18, U.S. Code Section 201 outlaws the bribing of public officials.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.1
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 6
, Chapter 01
13. Fraud has a direct dollar-for-dollar impact on a company's:
a. revenues.
b. net income.
c. profit margin.
d. stock price.
ANSWER: b
RATIONALE: a. Incorrect. Fraud does not have a dollar-for-dollar impact on revenues. It takes
significantly more revenues to cover the effect of the fraud on net income. Because
revenues don't include the business costs, and the fraud directly hits the bottom line,
ultimately, the fraud is much more expensive than it sounds.
b. Correct. Losses incurred from fraud reduce a firm's income on a dollar-for-dollar
basis. This means that for every $1 of fraud, the net income of the firm is reduced by
$1.
c. Incorrect. The profit margin is a percentage. It really tells the company how much
revenue the company must generate to recover the fraud losses. For example, if the
company has a 10% profit margin, and the fraud cost $436 million, the company would
have to generate $4.36 billion or (436 million/.1) to recover the costs of the fraud.
d. Incorrect. The stock price literally cannot drop by the amount of the fraud. If price
per share was $5 and the fraud was $100,000, then stock price could not drop below $0.
However, if the fraud is $100,000, the price per share multiplied by the number of shares
outstanding will probably drop considerably more than $100,000.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.1
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
Page 7
