"Inside Information" Is the Use of Information

question 124

Multiple Choice

"Inside information" is the use of information

• A) by those who read the companies' annual reports.
• B) by those who write the companies' annual reports.
• C) by stockbrokers at the largest brokerage firms.
• D) that is not available to the public.

---

Definitions:

Internal Rate of Return

The discount rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Multiple IRRs

The situation where a project has more than one internal rate of return, occurring due to unconventional cash flows.

Reinvestment Assumption

The theory that cash flows will be reinvested at a constant rate, often used in financial modeling.

Cost of Capital

The rate of return that a business must achieve in order to generate value, representing the opportunity cost of investing capital in a specific business rather than in an alternative venture.