Which one of the following laws would conform most closely to the position articulated by the author of passage A but...

achalfp97 on June 13, 2020

Answer Choice E

Where does Passage A mention that the insider trading is alright, as long as it is not a crime? Thanks!

Replies

Create a free account to read and take part in forum discussions.

Already have an account? log in

Victoria on June 23, 2020

Hi @achalfp97,

The question stem is asking you to select the answer choice which outlines the hypothetical law that conforms most closely to the author of Passage A's position.

The author of Passage A does not believe that insider trading should necessarily be considered a crime. In paragraph 2, they note that trading based on "insider" information is "part of the very definition of a functioning stock market" and that trading based on analyzing this information "doesn't make you a criminal; it means you've done your homework."

The author of Passage A believes that it is important that these trades are allowed to be made as they allow the stock market to accurately reflect the price of stocks based on everyone's analysis of their value.

In this way, the author of Passage A would likely support a law that legalizes trading based on insider information; however, the fact that they support making these trades does not mean that they would also support them if the knowledge were acquired through criminal means.

Hope this is helpful! Please let us know if you have any further questions.

faithwood21 on July 8, 2020

Why not B?

Victoria on August 27, 2020

Hi @faithwood21,

Happy to help!

Answer choice (B) is incorrect because the author of Passage A believes that "trading based on information you have that everyone else doesn't" is "part of the very definition of a functioning stock market" (lines 6 to 8).

As this belief is articulated following the author's introduction of insider-trading law as making it a crime to make stock transactions "based on information you have...because of your special position within a company," we can infer that the author disagrees with the current state of insider-trading law. In other words, we can infer that the author would disagree with a law that prohibits trading based on information obtained from one's position within a company.

Hope this helps! Please let us know if you have any further questions.