Reading Comprehension
Passage Breakdown
Both passages discuss insider trading but take opposite views. Passage A says using private company information to trade is often just smart research: allowing insiders to act spreads facts so stock prices adjust faster, and choosing not to trade on inside knowledge is common and fine. Passage B says markets need transparency so everyone has the same information; when insiders trade on secrets they get an unfair head start, hurt other investors’ chances to make money, and can destroy confidence so people stop investing, which would harm companies and the economy. In short, A argues insider trading can help markets work better, while B argues it is unfair and dangerous.
Logic Breakdown
Compare the two passages' positions. Passage A argues that permitting people with private but accurate information to act improves price accuracy (for example: It helps when those who have accurate information about changing circumstances are permitted to act so that stock prices reflect them; If you analyze a stock, decide that it is overvalued, and sell it, you are taking advantage of knowledge that many others don't have). Passage B emphasizes transparency and opposes insider-based advantages (for example: One of the basic principles of the stock market is transparency). Pick the law that Passage A would accept but Passage B would reject.
Passage Stimulus
Passage Redacted
Unlock Full Passage17.Which one of the following laws would conform most closely to the position articulated by the author of passage A but not that articulated by the author of passage B?
Correct Answer
E
Passage A explicitly defends allowing those who possess accurate private information to act because such trading spreads information and helps prices reflect facts (It helps when those who have accurate information about changing circumstances are permitted to act so that stock prices reflect them; Someone selling a stock because they know something will happen soon that will lower the stock's value helps spread the knowledge that the price ought to be dropping). Passage A therefore favors permitting trading on inside information in principle. Passage B stresses transparency and argues that insider-based advantages unfairly compromise the market and investor confidence. A law that legalizes trading based on inside information provided the information was not acquired by theft or other unlawful means most closely matches Passage A but would be opposed by Passage B, so E is the best choice.
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