Accоrding tо Clаssicаl Test Theоry аnd the following two bar charts, which of the following test has better reliability:
ESSAY #2 (One Hоur) ABC, Inc. hаd аn interest in аcquiring Multinatiоnal, Inc. The twо firms began discussions about the possibility of merger, but in several public statements Multinational denied rumors that it was in talks. Ultimately, the merger was approved by Multinational’s board at the relatively high offer price of $77 per share for the common shares. A lawsuit was filed for securities fraud based on Multinational’s public denials of the merger. The theory used for the basis of the lawsuit was that members of the class sold their stock prior to the announced merger because of misleading information from Multinational. A year later, after much of the controversy has settled down, it came to the attention of an ABC shareholder named Julie that there may be some insider trading taking place among the board of directors. Julie decided to file a derivative lawsuit. An SLC (Special Litigation Committee) was formed and the SLC determined that the claim lacked merit. This led the plaintiffs in the derivative lawsuit to allege that the SLC was not sufficiently independent from the Board. The SLC was comprised of the two Board members, both of whom were best friends and went to elementary school together. 1. At the courthouse, who should Julie’s attorney sue as the true owners of Multinational? 2. As to the merger and potential misstatements, discuss the 10b-5 rule and whether there was a violation of that rule. Explain in depth analyzing each element of the rule. 3. Discuss derivative lawsuits versus direct lawsuits and then discuss in-depth the potential nuances regarding demand requirements and the significance of SLC independence. Discuss whether there is independence of the SLC based on the facts above.