Chapter 5 Homework.docx - Chapter 5 Questions 9 Insider...

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Chapter 5 Questions 9. Insider trading refers to making a profit on securities about which a person has "inside" information that's not available to the general public. It's illegal because such transactions defraud or cheat the other party to the trades who don't have access to the inside information. Martha Stewart wasn’t charged with insider trading, the SEC pursued a case against her. The SEC director of enforcement said, “it is fundamentally unfair for someone to have an edge on the market just because she has a stockbroker who is willing to break the rules and give her an illegal tip.” Leite, J. (2012, May 15). What Martha Stewart Did Wrong - Covering BusinessCovering Business. Retrieved from 24. The product in a debt market is loaned money rather than a commodity. Suppliers are lenders and demanders are borrowers. Supply represents the availability of loanable funds while demand represents the need to borrow money. The fundamental operation of supply and demand are the same as in a commodity market, but the terminology is different. The most visible difference is on the price axis of the S-D graph. The price of money is the interest rate. The ideas of buying and selling are reversed. In a product market, demanders buy product which suppliers sell.
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