What does 'inside information' refer to?

What does 'inside information' refer to?

• A. Information that is publicly available
• B. Information that is available through social media
• C. Material, non-public information about a company
• D. General market trends and forecasts

Answer: (C)

'Inside information' refers specifically to material, non-public information about a company that could influence an investor's decision if it were made available to the public. This type of information is confidential and typically pertains to significant company developments, such as unannounced earnings results, mergers, or acquisitions. The importance of this distinction lies in the legal and ethical implications surrounding insider trading, where individuals with access to such privileged information engage in buying or selling stocks based on it, which is prohibited by law.

In contrast, information that is publicly available is not considered inside information because it can be accessed by any interested party and does not provide an unfair advantage. Similarly, data derived from social media may be publicly accessible but often lacks the depth or materiality associated with inside information. General market trends and forecasts are also categorized separately, as they involve broader economic insights rather than specific, company-oriented secrets. Understanding the nature of inside information is crucial for compliance with regulatory standards and maintaining professional integrity in trading practices.