SIE practice questioneasyProhibited Activities - Market Manipulation
Which of the following best describes 'painting the tape' in securities trading?
- AEngaging in trades to give a false impression of market activity✓ Correct answer
- BPublishing research reports late
- CTrading only on exchanges
- DFailing to report trades to regulators
Explanation
Why A — Engaging in trades to give a false impression of market activity
Painting the tape involves making transactions that provide misleading information about a security’s price or trading volume. It is a form of market manipulation. Publishing research late may be unethical but is not 'painting the tape.' Trading on exchanges and failure to report to regulators are unrelated.
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