An individual who trades based on information he or she has read in the financial press, analysis gathered from financial statements, and analyst's projections is a(n):
A) inside trader.
B) outside trader.
C) informed trader.
D) illegal trader.
E) legal inside trader.

Question

Quizplus · Accepted Answer

An informed trader is an individual who trades based on information gathered from various sources such as financial statements, analyst projections, and financial press. This type of trading is legal and accepted in the financial markets as it contributes to the overall efficiency of prices. Inside trading, on the other hand, involves trading based on non-public information, which is illegal. Outside trading is not a commonly used term in finance. Legal inside trading refers to trading by insiders who trade based on information that is available to the public, but it is subject to certain regulatory restrictions.

An Individual Who Trades Based on Information He or She