Reading - 2-II - LOS a: Q21- Q23 class, black

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21、Insider trading can be defined as information that is:

A)   nonmaterial and nonpublic.

B)   material and nonpublic.

C)   material and public.

D)   nonmaterial and public.

22、According to Standard II(A), prohibition against the use of material nonpublic information, which of the following statements is least accurate? Members who possess material nonpublic information related to the value of a security are expected to:

A)   make reasonable efforts to insure the information's accuracy before recommending that others trade on the information.

B)   not trade on the information.

C)   not trade on the information unless it was arrived at through the "mosaic theory."

D)   make reasonable efforts to achieve public dissemination of the information.

23、According to CFA Institute Standards of Professional Conduct, which of the following statements about material nonpublic information is FALSE? Information is:

A)   nonpublic until it has been disseminated to the marketplace in general.

B)   nonpublic until it has been disseminated to a select group of investors.

C)   material if its disclosure would be likely to have an impact on the price of a security.

D)   material if reasonable investors would want to know the information before making an investment decision.

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21、Insider trading can be defined as information that is:

A)   nonmaterial and nonpublic.

B)   material and nonpublic.

C)   material and public.

D)   nonmaterial and public.

The correct answer was B)

Information is material if it would be important to the investor in their investment making decision. Information is nonpublic if it is not yet available to the public.

22、According to Standard II(A), prohibition against the use of material nonpublic information, which of the following statements is least accurate? Members who possess material nonpublic information related to the value of a security are expected to:

A)   make reasonable efforts to insure the information's accuracy before recommending that others trade on the information.

B)   not trade on the information.

C)   not trade on the information unless it was arrived at through the "mosaic theory."

D)   make reasonable efforts to achieve public dissemination of the information.

The correct answer was A)

Standard II(A), regarding material nonpublic information, prohibits those possessing material nonpublic information from trading or causing others to trade on that information. Members or candidates should make reasonable efforts to make sure the information is disseminated to the public. Trading based on the mosaic theory is acceptable because this is based on the analysis of public and nonmaterial nonpublic information.

23、According to CFA Institute Standards of Professional Conduct, which of the following statements about material nonpublic information is FALSE? Information is:

A)   nonpublic until it has been disseminated to the marketplace in general.

B)   nonpublic until it has been disseminated to a select group of investors.

C)   material if its disclosure would be likely to have an impact on the price of a security.

D)   material if reasonable investors would want to know the information before making an investment decision.

The correct answer was B)     

Standard II(A), Material Nonpublic Information, states that information is “nonpublic” until it has been disseminated to the marketplace in general as opposed to a select group of investors.