In the United States, high-level corporate officials have to publicly state when they buy or sell a

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In the United States, high-level corporate officials have to publicly state when they buy or sell a large number of shares in their own company. They have to make these statements a few days after their purchase or sale. What do you think probably happens (choose a, b, c or d) when newspapers report these true “insider trades”?

a. When insiders sell, prices rise, since investors increase their demand for the company’s shares.

b. When insiders sell, prices fall, since investors increase their demand for the company’s shares.

c. When insiders sell, prices fall, since investors decrease their demand for the company’s shares.

d. When insiders sell, prices rise, since investors decrease their demand for the company’s shares.

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Modern Principles Of Microeconomics

ISBN: 9781429278416

3rd Edition

Authors: Tyler Cowen, , Alex Tabarrok

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