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8. When company executives buy and sell shares based on private information they obtain as part of their jobs, they are engaged in insider trading.

8. When company executives buy and sell shares based on private information they obtain as part of their jobs, they are engaged in insider trading.

a. Give an example of inside information that might be useful for buying or selling shares.

b. Those who trade shares based on inside information usually earn very high rates of return. Does this fact violate the efficient market hypothesis?

c. Insider trading is illegal. Why do you suppose that is?

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