SIE practice questioneasyFront-Running
A broker learns that a customer is placing a large buy order, and buys shares for their own account just before entering the customer's order. This practice is called:
- AFreeriding
- BMatched orders
- CChurning
- DFront-running✓ Correct answer
Explanation
Why D — Front-running
Front-running occurs when a broker trades ahead of a customer’s order to take advantage of expected price movements. Matched orders (B) are manipulative trades. Churning (C) is excessive trading for commissions. Freeriding (D) is selling before paying.
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