ACCT 2700 LATEST EOC TEST ALL QUESTIONS AND
ANSWERS SURE A+
✔✔Polymarket's "contract on a contract" example (a contract on whether the Jesus
Return 2027 contract will exceed a price threshold) illustrates what? (A) A hedging
instrument (B) A meta-market that can be manipulated by pushing the thinly traded
underlying contract (C) A regulated derivative (D) A guaranteed arbitrage - ✔✔B) A
meta-market that can be manipulated by pushing the thinly traded underlying contract
✔✔Which category likely presents the largest insider trading risk on Kalshi in terms of
MNPI quality per the guest lecture? (A) Sports only (B) Thin markets like presidential
elections geopolitics and macro indicators where a small number of people have real
MNPI (C) Celebrity trivia (D) Weather - ✔✔B) Thin markets like presidential elections
geopolitics and macro indicators where a small number of people have real MNPI
✔✔Why does offshore residency of a prediction market trader matter for US
enforcement? (A) They trade larger sizes (B) US regulators often have no mechanism
to compel identification or disgorgement from offshore users (C) They pay less tax (D)
They face harsher penalties - ✔✔B) US regulators often have no mechanism to compel
identification or disgorgement from offshore users
✔✔The Unit 3 concept of a "law-proof insider" maps onto which group in the prediction
market context? (A) US retail traders (B) Offshore Polymarket users based in non-
extradition jurisdictions (C) Kalshi employees (D) CFTC staff - ✔✔B) Offshore
Polymarket users based in non-extradition jurisdictions
✔✔In insider trading law "material" information is typically identified by what test? (A)
Revenue size (B) Whether the information would move the price significantly if
disclosed (C) Age of the information (D) Industry type - ✔✔B) Whether the information
would move the price significantly if disclosed
✔✔Insider trading is fundamentally about what property concept per the deck? (A)
Money laundering (B) Ownership of information (you may use information you
legitimately own even if non-public) (C) Tangible goods (D) Real estate - ✔✔B)
Ownership of information (you may use information you legitimately own even if non-
public)
✔✔Using satellite imagery of retail parking lots to forecast sales is best characterized as
what? (A) Automatic insider trading (B) Non-public in the raw sense but legally usable
because the analyst owns the information they gathered (C) Always public (D) Only
legal if disclosed - ✔✔B) Non-public in the raw sense but legally usable because the
analyst owns the information they gathered
, ✔✔Classical insider trading theory applies primarily to whom? (A) Outside analysts and
hedge fund managers (B) Corporate insiders such as officers directors and employees
who owe a fiduciary duty to shareholders (C) Foreign traders only (D) Retail investors -
✔✔B) Corporate insiders such as officers directors and employees who owe a fiduciary
duty to shareholders
✔✔Misappropriation theory applies primarily to whom? (A) Corporate officers only (B)
Outsiders who breach a duty of confidentiality (such as an NDA) to use information for
trading (C) SEC employees only (D) Foreign nationals only - ✔✔B) Outsiders who
breach a duty of confidentiality (such as an NDA) to use information for trading
✔✔The "disclose or abstain" rule requires an insider possessing MNPI to do what? (A)
Disclose to regulators only (B) Either disclose the information publicly before trading or
refrain from trading (C) Wait 30 days (D) Get CEO approval - ✔✔B) Either disclose the
information publicly before trading or refrain from trading
✔✔What is SEC Form 4? (A) An annual company financial report (B) A filing where
officers directors and 10 percent owners must disclose their trades in company stock
within two business days (C) A quarterly earnings release (D) A merger notice - ✔✔B) A
filing where officers directors and 10 percent owners must disclose their trades in
company stock within two business days
✔✔SEC v. Bonan Huang is best described as an example of which theory? (A)
Classical insider trading (B) Misappropriation (a Capital One analyst used his
employer's proprietary credit card database to forecast retailer earnings) (C) Tender
offer liability (D) Market manipulation - ✔✔B) Misappropriation (a Capital One analyst
used his employer's proprietary credit card database to forecast retailer earnings)
✔✔The "short-swing" rule requires insiders to do what if they realize profits on round-trip
trades within a set window? (A) Pay a fine to the SEC (B) Disgorge those profits back to
the company (C) Report to the FBI (D) Resign - ✔✔B) Disgorge those profits back to
the company
✔✔The two general reasons corporate insiders trade per the deck are? (A) Fun and
profit (B) Private information (MNPI) and liquidity or diversification needs (C) Hedging
and speculation (D) Reward and punishment - ✔✔B) Private information (MNPI) and
liquidity or diversification needs
✔✔If insiders are trading on MNPI their trades should have what statistical relationship
to future outcomes? (A) No relationship (B) Systematic positive abnormal returns after
purchases and negative abnormal returns after sales (C) Random (D) Always negative -
✔✔B) Systematic positive abnormal returns after purchases and negative abnormal
returns after sales
ANSWERS SURE A+
✔✔Polymarket's "contract on a contract" example (a contract on whether the Jesus
Return 2027 contract will exceed a price threshold) illustrates what? (A) A hedging
instrument (B) A meta-market that can be manipulated by pushing the thinly traded
underlying contract (C) A regulated derivative (D) A guaranteed arbitrage - ✔✔B) A
meta-market that can be manipulated by pushing the thinly traded underlying contract
✔✔Which category likely presents the largest insider trading risk on Kalshi in terms of
MNPI quality per the guest lecture? (A) Sports only (B) Thin markets like presidential
elections geopolitics and macro indicators where a small number of people have real
MNPI (C) Celebrity trivia (D) Weather - ✔✔B) Thin markets like presidential elections
geopolitics and macro indicators where a small number of people have real MNPI
✔✔Why does offshore residency of a prediction market trader matter for US
enforcement? (A) They trade larger sizes (B) US regulators often have no mechanism
to compel identification or disgorgement from offshore users (C) They pay less tax (D)
They face harsher penalties - ✔✔B) US regulators often have no mechanism to compel
identification or disgorgement from offshore users
✔✔The Unit 3 concept of a "law-proof insider" maps onto which group in the prediction
market context? (A) US retail traders (B) Offshore Polymarket users based in non-
extradition jurisdictions (C) Kalshi employees (D) CFTC staff - ✔✔B) Offshore
Polymarket users based in non-extradition jurisdictions
✔✔In insider trading law "material" information is typically identified by what test? (A)
Revenue size (B) Whether the information would move the price significantly if
disclosed (C) Age of the information (D) Industry type - ✔✔B) Whether the information
would move the price significantly if disclosed
✔✔Insider trading is fundamentally about what property concept per the deck? (A)
Money laundering (B) Ownership of information (you may use information you
legitimately own even if non-public) (C) Tangible goods (D) Real estate - ✔✔B)
Ownership of information (you may use information you legitimately own even if non-
public)
✔✔Using satellite imagery of retail parking lots to forecast sales is best characterized as
what? (A) Automatic insider trading (B) Non-public in the raw sense but legally usable
because the analyst owns the information they gathered (C) Always public (D) Only
legal if disclosed - ✔✔B) Non-public in the raw sense but legally usable because the
analyst owns the information they gathered
, ✔✔Classical insider trading theory applies primarily to whom? (A) Outside analysts and
hedge fund managers (B) Corporate insiders such as officers directors and employees
who owe a fiduciary duty to shareholders (C) Foreign traders only (D) Retail investors -
✔✔B) Corporate insiders such as officers directors and employees who owe a fiduciary
duty to shareholders
✔✔Misappropriation theory applies primarily to whom? (A) Corporate officers only (B)
Outsiders who breach a duty of confidentiality (such as an NDA) to use information for
trading (C) SEC employees only (D) Foreign nationals only - ✔✔B) Outsiders who
breach a duty of confidentiality (such as an NDA) to use information for trading
✔✔The "disclose or abstain" rule requires an insider possessing MNPI to do what? (A)
Disclose to regulators only (B) Either disclose the information publicly before trading or
refrain from trading (C) Wait 30 days (D) Get CEO approval - ✔✔B) Either disclose the
information publicly before trading or refrain from trading
✔✔What is SEC Form 4? (A) An annual company financial report (B) A filing where
officers directors and 10 percent owners must disclose their trades in company stock
within two business days (C) A quarterly earnings release (D) A merger notice - ✔✔B) A
filing where officers directors and 10 percent owners must disclose their trades in
company stock within two business days
✔✔SEC v. Bonan Huang is best described as an example of which theory? (A)
Classical insider trading (B) Misappropriation (a Capital One analyst used his
employer's proprietary credit card database to forecast retailer earnings) (C) Tender
offer liability (D) Market manipulation - ✔✔B) Misappropriation (a Capital One analyst
used his employer's proprietary credit card database to forecast retailer earnings)
✔✔The "short-swing" rule requires insiders to do what if they realize profits on round-trip
trades within a set window? (A) Pay a fine to the SEC (B) Disgorge those profits back to
the company (C) Report to the FBI (D) Resign - ✔✔B) Disgorge those profits back to
the company
✔✔The two general reasons corporate insiders trade per the deck are? (A) Fun and
profit (B) Private information (MNPI) and liquidity or diversification needs (C) Hedging
and speculation (D) Reward and punishment - ✔✔B) Private information (MNPI) and
liquidity or diversification needs
✔✔If insiders are trading on MNPI their trades should have what statistical relationship
to future outcomes? (A) No relationship (B) Systematic positive abnormal returns after
purchases and negative abnormal returns after sales (C) Random (D) Always negative -
✔✔B) Systematic positive abnormal returns after purchases and negative abnormal
returns after sales
