SIE practice questionmediumProhibited Activities
Which is an example of manipulation known as 'pump and dump'?
- ASelling mutual funds to a new client.
- BSpreading false positive rumors to inflate a stock price, then selling shares at the higher price.✓ Correct answer
- CBuying a stock after positive earnings are reported.
- DShort selling in a declining market.
Explanation
Why B — Spreading false positive rumors to inflate a stock price, then selling shares at the higher price.
Pump and dump involves artificially inflating a stock’s price to sell at a profit. B, C, and D describe legitimate activities.
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