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

Answer 1

Answer: insider trading information

Step-by-step explanation: In simple words, insider trading refers to the condition in which the employees or other such staff within the organisation trades on stock market based on some material non public information.

Material non public information refers to the information that can influence the decision making of a rational investor and has not been made public by the organisation yet.

In most of the countries insider trading has been declared as a crime as it violates the effectiveness of stick markets and is unfair for other investors.