Explanation:

Information-motivated traders differ from pure investors primarily in their investment objectives and strategies:

1. Pure investors typically seek to earn a fair rate of return on their capital by investing in assets that match their risk tolerance and time horizon. They often hold well-diversified portfolios and may follow passive investment strategies.

2. Information-motivated traders actively seek to earn excess returns (returns above the market's required rate of return) by:

   • Identifying and exploiting mispriced securities
   • Using superior information or analysis
   • Timing the market
   • Engaging in active trading strategies

Why other options are incorrect:

• A. pay lower transaction fees: While some professional traders might have access to lower fees, this is not a defining characteristic that distinguishes information-motivated traders from pure investors. Both types of market participants can potentially access different fee structures.
• C. hold well-diversified portfolios: Pure investors are actually more likely to hold well-diversified portfolios to reduce unsystematic risk. Information-motivated traders often concentrate their positions in securities they believe are mispriced, which may result in less diversified portfolios.

The key distinction is that information-motivated traders actively seek to generate alpha (excess returns) through their trading activities, while pure investors typically accept market returns through diversified portfolios.