PT148.S2.P3.Q14 > Analytics

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Passage A.

Intro topic · Insider-trading law

Illegal to trade stocks based on info you get before the public because of your position in a company.

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Criticism of insider-trading law · Stock market is based on using information that others don't have

It's not illegal to study a stock and trade based on your own analysis. This is similar to trading based on inside info.

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Support for criticism · Stock prices represent assessments of company value

Support for criticism · Insider-trading helps spread info about a company

It helps make stock prices more accurate, which is good for the whole stock market.

Support for criticism · Nobody thinks "insider nontrading" should be illegal

People decide not to trade based on inside knowledge. If that's OK, insider trading should be OK, too.

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Basic principle of stock market · Transparency

All info that influences trading decisions is available to everyone at the same time. This means successful stock-trading depends only on skill.

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Perspective on insider-trading · Violates principle of transparency

Trading on inside info is unfair.

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Consequence of insider-trading · Unfairness causes loss of confidence in market, leads to less investment

Ultimately the whole market could be destroyed.

Passage Style

14.

Both passages are primarily concerned ████ █████████ █████ ███ ██ ███ █████████ ██████████

Question Type

Implied

Purpose of passage

What is the primary purpose of each passage? Passage A argues that insider trading shoud be considered a good thing for the stock market. Passage B argues that insider trading is bad for the stock market. So each passage is primarily concerned with answering whether insider trading is good/bad for the stock market.

How is insider ███████ ████████

Too narrow. Even if we think Passage A and B define insider trading, the primary purpose of each passage isn’t to define insider trading. It’s to argue that insider-trading is good/bad for the stock market.

Should there be ███████ █████████ ███ ███████ ████████

Neither passage discusses whether insider trading should or should not be punished more severely. They focus on the effects of insider trading on the stock market.

Why do investors ██████ ██ ███████ ████████

Too narrow. Even if we think the passages might touch on why people engage in insider trading, the primary purpose isn’t to explore those motivations. It’s to argue that insider-trading is good/bad for the stock market.

Is insider trading ███████ ██ ███ █████ ███████

This best captures the primary purpose of each passage. Passage A argues that insider trading is not harmful to the stock market. Passage B argues that insider trading is harmful to the stock market.

94%

What is the ████ █████ ██ ██████████ ███████ ████████

Neither passage discusses the best way to regulate insider trading.

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PrepTest 148 - Section 2 - Passage 3 - Question 14

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PrepTest 148 - Section 2 - Passage 3 - Question 14

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