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Answer: An analyst purchases call options on a stock after obtaining information from the company's CEO that the company will report earnings above analyst expectations.
### Explanation **Correct Answer: A** According to Standard II(A) - Material Nonpublic Information, members and candidates who possess material nonpublic information that could influence the value of an investment must not act or cause others to act on such information. - **Action 1** involves the analyst buying call options after learning directly from the CEO about upcoming earnings that exceed expectations. This constitutes material nonpublic information, and acting on it violates Standard II(A). - **Action 2** involves the analyst buying oil company stock based on a well-known industry expert's opinion about geopolitical risks affecting oil prices. This opinion is unlikely to be nonpublic information, and thus, the action does not violate Standard II(A). Therefore, only **Action 1** violates the Standard, making option A the correct choice. **Incorrect Answers:** - **B**: Incorrect because Action 2 does not involve material nonpublic information. - **C**: Incorrect because only Action 1 violates the Standard.
Author: LeetQuiz Editorial Team
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Which of the following member actions most likely violates the Standard relating to material nonpublic information?
A
An analyst purchases call options on a stock after obtaining information from the company's CEO that the company will report earnings above analyst expectations.
B
An analyst acquires shares in an oil company after consulting a renowned industry expert who anticipates rising oil prices due to geopolitical risks.
C
Both actions described in options A and B.
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