Evaluate the impact of insider trading on long-term investor trust in the financial markets.
Understand the Problem
The question is asking to evaluate how insider trading affects long-term investor trust in financial markets, with multiple choice options provided for possible impacts.
Answer
Insider trading diminishes trust, creating an uneven playing field.
Insider trading diminishes trust, as it creates an uneven playing field and breeds suspicion.
Answer for screen readers
Insider trading diminishes trust, as it creates an uneven playing field and breeds suspicion.
More Information
Insider trading undermines trust by making markets seem unfair, discouraging participation, especially among retail investors, and leading to a perception of corruption.
Tips
A common mistake is assuming legal insider trading doesn't impact trust. Even legal actions can lead to suspicion if not transparent.
Sources
- Why Is Insider Trading Bad? Everything You Need to Know - easyllama.com
- Arguments for and Against Insider Trading - Investopedia - investopedia.com
- Insider Trading - Econlib - econlib.org
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