MCQ

Why is insider trading problematic? Select one: O A. If insiders trade on their information, their profits come at the expense of outside investors, making outside investors less willing to invest in corporations. O B. If insiders trade on their information, outside investors will benefit from the increase in the share price and thus there is a free rider problem. O C. If insiders trade on their information, they cause unnecessary share price fluctuations that drive away outside investors. O D. If insiders trade on their information, it increases the conflicts between shareholders and managers. O E. If insiders trade on their information, the firm is automatically fined and there will be a net loss in firm value. Which of the following discount rates should be used for the lease versus borrow decision with a true tax lease? Select one: O A. the risk-free rate of interest O B. the company's cost of equity O C. the company's cost of borrowing D. the company's weighted average cost of capital O E. the company's after-tax cost of borrowing Clear my choice