UPSC General Studies Sample Paper General Studies Sample Paper-1

  • question_answer
    Which of the following is the reason for considering insider trading as harmful to the domestic economy and illegal?

    A)  It hurts the economic growth of a nation, increases inflation and Current Account Deficit (CAD)

    B)  It results in crash of the security markets which are so vital for channeling savings in the domestic economy

    C)  It distorts the level-playing field between investors in the stock market and makes the markets susceptible to heavy speculation

    D)  Speculation by individual investors is illegal and hurts the retail investors

    Correct Answer: C

    Solution :

    [c] Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to non-public information about the company. In various countries, insider trading based on inside information is illegal. This is because it is seen as unfair to other investors who do not have access to the information.

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