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When company executives buy and sell stock based on private information they obtain as part of their jobs, they are engaged in insider trading. a. Give an example of inside information that might be useful for buying or selling stock. b. Those who trade storks based on inside information usually earn very high rates of return. Does this fact violate the efficient markets hypothesis? c. Insider trading is illegal. Why do you suppose that is?

BuyFind

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985
BuyFind

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985

Solutions

Chapter
Section
Chapter 9, Problem 8PA
Textbook Problem

When company executives buy and sell stock based on private information they obtain as part of their jobs, they are engaged in insider trading.

a. Give an example of inside information that might be useful for buying or selling stock.

b. Those who trade storks based on inside information usually earn very high rates of return. Does this fact violate the efficient markets hypothesis?

c. Insider trading is illegal. Why do you suppose that is?

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