PrepTest 148, Section 2, Question 14
Passage A Insider-trading law makes it a crime(495 more words not shown)
Passage A(282 more words not shown)
Passage B(221 more words not shown)
Both passages are primarily concerned(8 more words not shown)
- AHow is insider(2 more words not shown)
- BShould there be(5 more words not shown)
- CWhy do investors(4 more words not shown)
- DIs insider trading(5 more words not shown)
- EWhat is the(6 more words not shown)
Reading the passage
We've already identified the central disagreement: A thinks insider trading helps the market by bringing information into stock prices; B thinks it harms the market by undermining fairness and investor confidence. The shared question is whether insider trading is good or bad for the stock market. They can be answering the same question while giving opposite answers.
Working the answers
- A
A defines insider trading at the start, and B also describes the informational advantage involved. But neither is primarily trying to settle what the term means. Their arguments concern its effects.
- B
Neither author evaluates whether existing penalties should become more severe. A questions the prohibition, while B explains the harm. That's different from debating how harshly to punish violations.
- C
Making money explains why investors would use an advantage, but identifying that motive isn't the central task. Both authors ask what happens to the market when insiders do so.
- DCorrect
A's answer is effectively no: informed trades help prices reflect the facts. B's answer is yes: an unequal playing field can drive investors away and deprive companies of funds. This question captures both arguments.
- E
We don't get a comparison of regulatory methods or a proposal for the best enforcement system. Whether insider trading benefits or harms the market comes before that more specific policy discussion.
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