According to results by Seyhun, the main reason that investors cannot earn excess returns by following inside trades after they become public is that ________.
A) the information isn't available for at least 2 weeks
B) transaction costs offset abnormal returns
C) the SEC late-disclosure rule doesn't apply to insiders
D) insiders don't have to disclose their trades

Question

Quizplus · Accepted Answer

Seyhun found that while insider trades do generate abnormal returns, these returns are offset by transaction costs such as brokerage fees, bid-ask spreads, and taxes. Therefore, investors cannot earn excess returns by following insider trades after they become public.

According to Results by Seyhun, the Main Reason That Investors