What Is the General Reason for Restrictions Against Insider Trading

question 4

Multiple Choice

What is the general reason for restrictions against insider trading under the Securities Exchange Act of 1934?

• A) Corporate insiders should not own stock in the corporation because it is a conflict of interest.
• B) Use of inside information is unfair to the other party to the transaction and goes against the philosophy of allowing all participants in the market having the same information.
• C) Insider trading generally leads to lower stock prices.
• D) Insider trading results in an imbalance of buyers and sellers in the market.
• E) The value of a prospectus is compromised when insider trading is conducted.

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Definitions:

Contingent Statement

In the Logic of Statements means a grammatically correct expression that turns out to be true under at least one possible assignment of truth values to its component simple statements and false under another possible assignment of truth values to its component simple statements.

Truth Values

The attribution of truth or falsity to propositions or statements, which in classical logic are typically denoted as true or false.

Translation

The process of translating words or text from one language into another.

Declarative Logic

A branch of logic concerned with statements that declare facts about the world, which can be either true or false.