Future Business Leaders of America (FBLA) Entrepreneurship Practice Test

What term describes when a business officer uses confidential information for personal gain?

1. Insider Trading

2. Corporate Opportunity

3. Conflict of Interest

4. Business Misconduct

The correct answer is: Corporate Opportunity

The term that accurately describes when a business officer uses confidential information for personal gain is insider trading. This practice involves individuals, usually in a position of trust within an organization, leveraging non-public information about the organization's performance, financials, or upcoming events to make investment decisions that will benefit them personally. Such actions are illegal and unethical, as they undermine the integrity of financial markets and can harm other investors who do not have access to the same confidential information. Recognizing insider trading is crucial for maintaining fair trading practices and promoting transparency in corporate governance. In contrast, corporate opportunity refers to a situation where a business executive takes advantage of a business opportunity that should have been available to the company. A conflict of interest involves a situation where a person's personal interests, usually financial, may improperly influence their professional decisions. Business misconduct encompasses a broad range of unethical or illegal activities within a business setting. While these terms are related to ethical and legal standards in business, insider trading is the most precise term for the scenario described.