SIE practice questionhardOrder Types / Market Manipulation
A trader repeatedly places large orders to buy a stock, then cancels them before execution to create the illusion of demand. This practice is called:
- AInsider trading
- BChurning
- CSpoofing✓ Correct answer
- DHedging
Explanation
Why C — Spoofing
Spoofing involves entering orders with the intent to cancel before execution, manipulating market perception of supply or demand. Insider trading involves trading on non-public information, churning is excessive trading for commissions, and hedging is a way to reduce risk.
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.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Trading & Settlement questions
- What is the general rule regarding principal approval of correspondence?
- A trader places successive small orders to gradually move a stock price up, then sells a large position at the new…
- Which system requires reporting of short sale transactions in equity securities?
- A firm intentionally releases misleading economic research to attract investment into specific securities. What could…
- A trading firm routinely allows customers to exceed margin limits established in Regulation T for initial purchases and…
- A client wishes to avoid the risk of rapid price swings. Which order type helps prevent unintended purchases due to…
- A customer’s margin equity falls below the required maintenance level. If the firm allows continued trading without a…
- A trader places a series of buy limit orders just below a stock's current price to create the illusion of market…