Speculators Profit by Taking Risks, While the Actions of Arbitrageurs

question 108

True/False

Speculators profit by taking risks, while the actions of arbitrageurs involve no risk.

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Definitions:

Tippee

An individual who receives confidential information from an insider (the tipper), potentially violating insider trading laws if used for trading.

Confidential Information

Sensitive information not accessible to the general public, protected under legal or contractual obligations to prevent unauthorized disclosure.

Private Securities Litigation Reform Act of 1995

A U.S. law aiming to reduce frivolous securities lawsuits by setting higher standards for securities fraud lawsuits.

Forecasts of Earnings

Projections or estimates about a company's future profitability, typically made by financial analysts or the company's management.