Series 79 practice questionmediumMaterial Adverse Change Clauses
Which scenario is most likely to be excluded by a typical material adverse change (MAC) clause carve-out?
- ADiscovery of previously undisclosed major litigation
- BA significant loss of a key customer
- CA restatement of financial statements for fraud
- DA general industry downturn that affects all companies in the sector✓ Correct answer
Explanation
Why D — A general industry downturn that affects all companies in the sector
MAC clauses commonly exclude industry-wide or general economic downturns. Many confuse company-specific events, which typically are not excluded, with sector-wide impacts.
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