Answer and Explanation:
Insider trading means buying or selling the listed shares based on confidential information which is not yet public. This practice is done by the persons who are part of an organization like auditors, employees, directors, etc., and are aware of the confidential information. Hence, it's an unethical and illegal activity if anyone does insider trading and enjoys personal gain on such trading. Hence, if an investor planned to invest $10,000 in an organization for a personal portfolio in a given scenario, it leads to an ethical problem i.e. insider trading.
If Investor Planned to invest $500,000:
No, the answer will not be different if planned to invest $500,000 in an organization. Any investment transaction in an organization with the object to grow personally based on confidential information is deemed to be insider trading.
If the investor recommends to his brother to buy the shares
There is same ethical consideration in both the practice, whether purchasing a share for a personal portfolio or suggesting someone for purchasing the shares. Hence, if anyone suggests buying shares to another person (brother, etc.), it is also deemed unethical and illegal.
Who's called an investor?
An investor is any man or woman or other entity (which includes a company or mutual fund) who commits capital with the expectancy of receiving financial returns.
Is an investor an owner?
As a lending investor you aren't an proprietor. in case you purchase fairness in a organization you've got made an ownership funding. The go back you earn may be your proportional proportion of the enterprise's profits. The preliminary funding amount will stay tied up within the company's general fee.
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