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:
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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.