Which one of the following items is most apt to be considered material nonpublic information? Assume that none of this information is known publicly.
A)Barbara knows that Sue, an accounting clerk, is planning on resigning on Friday.
B)Linda knows a new receptionist has just been hired.
C)Wendy knows that her firm's net income is continuing to increase at a steady rate.
D)Tracy knows her employer just received patent approval on a key new product.
E)Maria is the chief financial officer and knows the firm intends to maintain its current dividend policy.

Question

Quizplus · Accepted Answer

Patent approval on a key new product is material information that is not yet known publicly and could influence investors' decisions. Knowing that a lower-level employee is resigning (A) or that a new receptionist is hired (B) is generally not considered material information. Net income increasing at a steady rate (C) may or may not be material depending on the specific circumstances and magnitude of the increase. The CFO's knowledge of the firm's dividend policy (E) may also not be material information, as it is likely already known or expected by investors.

Which One of the Following Items Is Most Apt to Be