SIE practice questionmediumChurning
A broker excessively buys and sells securities in a discretionary account mainly to earn commissions. This activity is known as:
- AChurning✓ Correct answer
- BFree-riding
- CMatched orders
- DBackdating trades
Explanation
Why A — Churning
Churning is excessive trading for commissions. Free-riding (B) involves selling before paying. Matched orders (C) are collusive trades. Backdating (D) means falsifying trade dates.
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