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SIE: Trading & Settlement
SIE practice questionmediumProhibited Activities

Which is an example of manipulation known as 'pump and dump'?

  1. ASelling mutual funds to a new client.
  2. BSpreading false positive rumors to inflate a stock price, then selling shares at the higher price.✓ Correct answer
  3. CBuying a stock after positive earnings are reported.
  4. DShort selling in a declining market.
Explanation

Why BSpreading 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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