Question

Tara works as a programmer for XYZ Electronics Company. About one month ago, Tara bought 500 shares of a small start-up firm with great technology because she heard rumors from the CFO's secretary that XYZ was planning to purchase the smaller company and give it an infusion of cash. Yesterday, XYZ announced the decision to buy the small firm, which significantly increased the small company's stock price. Tara most likely performed her trade based upon

A, public information
B, XYZ's treasury stock
C, faulty information
D, insider trading information

Answer 1

Answer: OPTION D

Explanation:

A. Public information can be defined as the information the dissemination of which would not threaten the security.

B. The stock repurchased by the company leading to reduction in outstanding stock is called treasury stock.

C. Faulty information as the name says is the information that is not true.

D. Insider trading information is the information that is not made available to public yet and can influence the decision of the investor.

Hence we can conclude that Tara worked on insider information.