What outcome does insider trading typically lead to?

Insider trading typically leads to unethical advantages in trading because it involves individuals using non-public, material information to make investment decisions. This practice allows insiders, such as company executives or employees, to gain an unfair edge over other investors who do not have access to the same information. This can distort market fairness, creating an uneven playing field where those with insider knowledge can profit at the expense of uninformed investors.

Moreover, insider trading undermines the integrity of the financial markets. When some participants have access to privileged information, it can lead to a lack of trust among investors, who may feel that they cannot compete fairly. This can deter investment and participation in the market, further aggravating the issue of market fairness.

In contrast, the other options imply positive outcomes associated with trading practices. Increased market transparency, improved investor confidence, and greater market stability are typically linked to ethical trading practices and a level playing field where all investors have equal access to information. Such conditions can foster a healthy investment environment, whereas insider trading does the opposite, making the selection of an unethical advantage the most accurate outcome.