Chap 2 (done)

Front

What is Material, Nonpublic Information?

Back

Information that could influence an investor's decision and has not been made available to the public.

Front

What is the significance of a tender offer in trading?

Back

A tender offer is a public proposal to purchase some or all of shareholders' shares at a specified price, often at a premium.

Front

What constitutes a violation of Standard II(A) regarding Material, Nonpublic Information?

Back

Trading on information that is both material and nonpublic, especially if it is received from an insider.

Front

What is Market Manipulation?

Back

Actions taken to artificially influence the price of a security, often through deceptive practices.

Front

What is the role of fiduciary responsibility in trading?

Back

A fiduciary is obligated to act in the best interest of their clients, and breaching this can lead to legal consequences.

Front

What is the difference between public and nonpublic information?

Back

Public information is available to all investors, while nonpublic information is not widely disseminated and can affect stock prices.

Front

What should a CFA member do upon receiving nonpublic information?

Back

They should refrain from trading on that information until it is made public.

Front

What is the consequence of overstating earnings projections?

Back

It can lead to market manipulation charges and loss of credibility for the company and its executives.

Front

What is the appropriate action for a CFA member who learns of a merger?

Back

They should encourage the companies to announce the merger to avoid trading on nonpublic information.

Front

What is the importance of transparency in financial markets?

Back

Transparency helps maintain investor trust and ensures fair trading practices.