SIE practice questioneasyMarket Manipulation
A group of traders coordinate to buy large volumes of a thinly traded stock to artificially raise the price and attract buyers, then sell at the higher price. This is known as:
- ADividend reinvestment
- BPump and dump✓ Correct answer
- CShort selling
- DBuying on margin
Explanation
Why B — Pump and dump
"Pump and dump" describes artificially inflating a stock price to sell at a profit. Dividend reinvestment and buying on margin are legal; short selling is legal unless combined with deceptive practices.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Prohibited Activities & Ethics questions
- An RR who buys a stock for themselves after learning of, but before executing, a customer’s large block order is…
- Which of the following is NOT considered inside information?
- Placing a series of buy and sell orders with no intent to change ownership, to give the appearance of trading activity,…
- Which of the following is an example of market manipulation?