SIE practice questionmediumOrder Types / Manipulation
A trader places a series of buy limit orders just below a stock's current price to create the illusion of market support, then cancels them before execution. This tactic is:
- AA legitimate hedging strategy
- BSpoofing, which is illegal market manipulation✓ Correct answer
- CPermitted if disclosed to the exchange
- DOnly prohibited for options trading
Explanation
Why B — Spoofing, which is illegal market manipulation
Spoofing is entering orders to give a false impression of demand or supply, without intent to execute. It is always illegal. Disclosure does not make it legal and it's prohibited for all securities, not just options.
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 Trading & Settlement questions
- A customer’s margin equity falls below the required maintenance level. If the firm allows continued trading without a…
- A registered rep recommends mutual fund switches just to increase commissions, rather than for the customer’s benefit.…
- A client wishes to avoid the risk of rapid price swings. Which order type helps prevent unintended purchases due to…
- An agent enters a client’s stop order at a price specifically chosen to be easily triggered for personal benefit. This…