Question

The informational advantage that agents possess over principals is often based on the fact that: a) insiders are the first to learn about important developments before the information is released to the public. b) agents are legally permitted to freely trade the information in exchange for benefits, unlike principals. c) public stock companies are characterized by information symmetry. d) the information is extremely secure and protected from exposure to anyone outside the company.

Answer 1

A. insiders are the first to learn about important developments before the information is released to the public.

Step-by-step explanation:

The principal is a person who gives authority to another person to act in his or her place, and the agent is the person who has been authorized to act on the principal's behalf.

Information advantage agents have over the principal is that insiders are the first to learn about important developments before the information is released to the public. The Insider has information about the company's plans or finances that is yet to be made known to shareholders and this gives them an unfair advantage.