Which of the Following Is an Example of Insider Trading

question 31

Multiple Choice

Which of the following is an example of insider trading?

• A) The marketing manager of a company is accused of using company resources for personal use.
• B) An executive receives a compensation comprising of cash, paid expenses, and shares of the company.
• C) An employee hacks the firm's computer networks, systems, and databases to obtain customer records so that he can sell the information to rival firms.
• D) The chief executive officer of an IT company purchases shares in the company as he learns that the company is being taken over by a leading, global IT firm.
• E) A firm disseminates fraudulent information in chat rooms, forums, Internet boards, and via email, with the purpose of causing a dramatic price increase in thinly traded stocks of the company.

---

Definitions:

Monopolist

A market participant that has exclusive control over the supply of a particular good or service, potentially allowing them to manipulate the market.

Increase Their Profits

A strategy or action that leads to a higher amount of net earnings by a business or individual.

Incentive Structure

The system of rewards and penalties that motivates individuals or groups to behave in specific ways beneficial to achieving desired outcomes.

Cheat

Engaging in dishonest or unfair practices to gain an advantage, typically forbidden in rules or by law.