SIE practice questioneasyMarket Manipulation
Which of the following is an example of market manipulation?
- AInvesting in a mutual fund for long-term growth
- BEngaging in a series of wash sales to create the appearance of trading activity✓ Correct answer
- CPlacing a market order for personal investment
- DTransferring securities between family accounts
Explanation
Why B — Engaging in a series of wash sales to create the appearance of trading activity
Wash sales (selling and repurchasing securities to create false activity) are illegal market manipulation. Making investments, placing orders, or transferring between accounts are not manipulative unless the purpose is deceptive.
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