Insider trading is seen as a threat to the functionality of the financial markets. Write a short paragraph describing why this is so.


Answer 1


insiders can cheat the market.


They can do things on the inside to make a stock go up or down. this can be an advantage to buying in low and selling high. Elon Musk did something similar, (put this in your answer for a kick) as he used his social influence to lower his stock, by saying its "overpriced" making people sell it. when the stock fell, more investors used the buying in low strategy, and he split the stock to allow smaller investors to buy into the stock, giving him 8 BILLION dollars in one market day. (I LOVE THE STOCK MARKET, IF YOU WANT TO LEARN POST A COMMENT AND I WILL TEACH YOU A LOT!!)

Answer 2

Final answer:

Insider trading is a threat to financial markets because it disrupts the fairness and transparency necessary in these markets. It involves using confidential info to make advantageous trades, giving some an unfair advantage and undermining trust in the market.


Insider trading is indeed considered a threat to the functionality of financial markets. This is primarily due to the nature of insider trading, where confidential, non-public information about a company is used to make advantageous trades. This information imbalance disrupts the fairness and transparency that the financial markets rely on to operate efficiently. For instance, if a company's internal member knows something crucial that could significantly impact the company's stock price and trades based on this information before it is publicly released, then they have an unfair advantage over other market participants. This can lead to a lack of confidence and trust in the market, which is detrimental to the smooth functioning of financial markets.

Learn more about Insider Trading here:


Related Questions

Which of the following statements about financial statement analysis is most correct? a. The current ratio is the best available measure of liquidity. b. Du Pont analysis is based on the fact that return on equity (ROE) can be expressed as the sum of four other ratios. c. It is relatively easy to interpret a ratio in the absence of comparative data. d. There are no limitations to financial statement analysis, so analysts can always be confident of their conclusions. e. None of the above statements is correct.
Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it uses a periodic inventory system. Assume Oahu Kiki’s records show the following for the month of January. Sales totaled 310 units.Date Units Unit Cost Total CostBeginning Inventory January 1 220 80 $17,600Purchase January 15 310 90 27,900purchase January 24 270 110 29,700Calculate the number and cost of goods available for sale.
Gunther earned a 62.5 percent return on a stock that he purchased one year ago. The stock is now worth $12, and he received a dividend of $1 during the year. How much did Gunther originally pay for the stock?
Assume that, on January 1, 2018, Matsui Co. paid $809,600 for its investment in 35,200 shares of Yankee Inc. Further, assume that Yankee has 160,000 total shares of stock issued. The book value and fair value of Yankee's identifiable net assets were both $320,000 at January 1, 2018. The following information pertains to Yankee during 2018: Net Income $ 160,000 Dividends declared and paid $ 48,000 Market price of common stock on 12/31/2018 $ 25 /share 1. What amount would Matsui report in its year-end 2018 balance sheet for its investment in Yankee?
Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $10,000 not due for three years. The interest rate on the note is 7%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What amount did Canliss borrow? (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

Assume that you are interested in the relationship between Graduate Record Examinations (GRE) scores (the total of all subtests) and graduate school grade point averages (GPAs) at the end of their graduate programs. Conveniently, you have access to the GRE scores and GPAs of a large number of graduate students who have graduated from the electrical engineering master's program in an Ivy League university between 2000 and 2013. The Pearson correlation coefficient did not reach significance. What can you conclude from the data analysis? Can the result be generalized to all graduate students in electrical engineering master's programs across the United States? Why or why not?



There was no significant relationship


From the result of the data analysis, it can be concluded that Graduate Record Examination (GRE) does not have any relationship with the performance of all graduate students in Electrical Engineering Master's Programs and an increase in GRE score can not lead to an increase in GPA of the students.

Your family runs a specialty ice cream parlor, Scoops. It manufactures its own ice cream in small batches and sells it only in pint-sized containers. After someone not affiliated with the company sent six pints of your ice cream to a popular talk-show host, she proclaimed on her national TV show that it was the best ice cream she had ever eaten. Immediately after the broadcast, orders came flooding in, overwhelming your small-batch production schedule and your limited distribution system. The company’s shipping manager thinks she can handle it, but you disagree. List the reasons why you need to restructure your channel of distribution.



Demand And Supply


Demand and supply are the biggest factors of buisness when demand becomes higher than supply it results in angry customers and unhappy reviews

Kim received a one-third profits and capital interest in Bright Line, LLC, in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $30,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: sales-$150,000, cost of goods sold-$90,000, depreciation expense-$45,000, long-term capital gains -$15,000, qualified dividends-$6,000, and municipal bond interest-$3,000. How much ordinary business income (loss) will Bright Line allocate to Kim on her Schedule K-1 for X4? a. ($15,000).
b. $6,000.
c. $9,000.
d. $9,000.
e. $15,000.
f. None of the choices will be reported as ordinary business income (loss) on Schedule K-1.



f. None of the choices will be reported as ordinary business income (loss) on Schedule K-1.


Note: Guaranteed payments have no effect on Kim's outside basis.

Bright Line LLC will be reporting on page 1 of Form 1065, an ordinary loss of $15,000 ($150000 - $90000 - $45000 - $30000)

1/3rd of $15,000 = $5,000. That is, $5,000 loss must be allocated to Kim on Schedule K-1. So, option f is the correct answer.

"In the economy of Wrexington in 2008, consumption was $5000, exports were $100, government purchases were $900, imports were $200, and investment was $1000. What was Wrexington’s GDP in 2008?"



The GDP in 2008 was $6800


The GDP or Gross Dividend Product of the country is the total value of the economic activity or the value of goods and services produced in an economy within a country in a certain year.

The formula to calculate the GDP = C + I + G + ( X - M )


  • C is the consumption
  • I is the Investment
  • G is the government spending
  • X is the value of exports
  • M is the calue of imports

Thus, GDP = 5000 + 1000 + 900 + ( 100 - 200)

GDP = $6800

QS 3-7 Adjusting prepaid (deferred) expenses LO P1 For each separate case, record the necessary adjusting entry. On July 1, Lopez Company paid $1,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31. Zim Company has a Supplies account balance of $5,000 at the beginning of the year. During the year, it purchased $2,000 of supplies. As of December 31, a physical count of supplies shows $800 of supplies available. Prepare the year-end adjusting entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31.



S/n   General Journal              Debit      Credit

a       Insurance expense        $1,200

               Prepaid Insurance                   $1,200  

        (To record insurance expired)

b       Supplies expense          $6,200

                Supplies                                  $6,200

                ($5,000 + $2,000 - $800)

         (To record supplies used)

Final answer:

Lopez company should adjust their prepaid insurance and Zim company should adjust their supplies account due to their use during the year. Both adjustments will be debits to relevant expense accounts & credits to Prepaid Insurance for Lopez, and Supplies for Zim.


The two adjustments that need to be made are for the prepaid insurance and the supplies. To compute the adjustment for the prepaid insurance, we would divide the total insurance payment by the number of months covered to find the monthly cost. For Lopez Company, six months of insurance is valued at $1,200, therefore the monthly cost is $200. From July 1 to December 31, six months have passed, so $1,200 of insurance has been used up. As a result, we need to debit the Insurance Expense account by $1,200 and credit Prepaid Insurance by $1,200.

Regarding Zim Company, the beginning balance in the Supplies account was $5,000, and it purchased $2,000 more throughout the year - that sum up to $7,000 of total supplies. At the end of the year, they still had $800 left, so they used $6,200 of supplies during the year. The adjustment will be a debit to Supplies Expense by $6,200 and a credit to Supplies by $6,200, reflecting the fact that those supplies are no longer available for use.

Learn more about Adjusting Entries here:


Peregrine Company acquires all of the voting stock of Falcon Corporation for $65,000, in a merger. Falcon’s balance sheet reports the following asset and liability balances:Current assets


Plant & equipment


Current liabilities


Long-term debt


Assume the book values of Falcon’s assets and liabilities equal their fair values. How much goodwill does Peregrine report at the date of acquisition?







(It seems that the amount in question is wrongly typed as 65,000 instead of 65,000,000)

The correct answer is $40,000.000.


The answer is calculated from guidlines provided in IFRS 10.

As per accounting standards the price paid above fair value of net asset is taken as goodwill. Goodwill is accounted as asset in balance sheet.

As fair value is not given we will assume that book values are equal to fair value. The detail calculations are given below.

Consideration paid               $ 65,000,000

FV of net asset                      ($ 25,000,000)

Goodwill                                 $ 40,000,000