q1 in the early december 2010 a friend


Q1. In the early December 2010, a friend recommended John to buy stock in ABC Aviation Inc. (PAI). At that time, it was in serious financial straits also was headed toward bankruptcy. Yet, according to John's friend, value of corporation's underlying assets was such that shareholders were bound to recover considerably more than the present market price of= $0.50 each share. Excited at chance for a "sure" profit, on December 15, 2010, John bought 20,000 shares for= $10,000. In September 2011, trustee in bankruptcy announced that stock was valueless also that even some of its favoured creditors would not be paid.

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