Question

Flo, a salesperson for Gear Oil Corporation, learns that the firm will increase the dividend it pays to shareholders. She buys 10,000 shares of company stock. When the dividend is announced to the public and the price of the stock increases, she sells his shares for a profit. She would not be liable for insider trading if the information about the dividend was ________

Answer 1

Answer: This would not be insider trading if the info was released to the public before Flo purchased the stock.

Explanation:

Insider trading is having access to confidential info about the stocks of a company, and using this info to trade in these stocks, thus benefiting himself/herself in the process.

Because Flo purchased these shares before this info was annouced publicly, she is engaging in insider trading, which is an illegal practise. So to avoid this, Flo can purchase these shares after this firm has released this info to the public, as it gives public the opportunity to acquire the shares fairly.