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Essay Available:
Pages:
1 page/β‰ˆ275 words
Sources:
3 Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 4.68
Topic:

How Insider Information Disrupts Efficient Markets

Essay Instructions:

PLEASE ENSURE TO ONLY UTILIZE SCHOLARLY SOURCES. THE FOLLOWING IS A STATEMENT FROM THE PROFESSOR.
"Avoid non-scholarly sources such as investopedia, nerdwallet, and dummies.com."
Efficient markets are defined as those in which security prices reflect all available information. Some investors have more information than others (legally and illegally), which may be due to the amount of research they do and time they spend. In other cases, investors may have nonpublic information; for example, an executive may have inside information. How can someone with inside information disrupt efficient markets? What measures can/should be taken to stop these disruptions?

Essay Sample Content Preview:

Insider Trading
Student’s Name
Institution
Course
Date
INSIDER TRADING
According to Baker & Chinloy (2014), efficient markets are markets where security prices reflect all the available information. Additionally, it is important to note that there are investors who have more information than others in every market, and this is due to the research they conduct and the amount of time they spend researching. While information is important for any investor, insider information can disrupt efficient markets. When an insider shares their confidential information, they cause damage to market efficiency since they cannot respond to the flow of information and normal ebb made in public (Chen, 2018). Ideally, the reputation of the market suffers in the long run.
Insider information disrupts market efficiency because it is a form of market manipulation. Further, since many shareholders desire to join the market, they end up postponing future activities due to the fear of getting cheated. While insider trading is increasing in the c...
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