SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 18: Answer and Explanation

Question: 18

Which of the following is the act of using improper methods to increase or decrease the market price of a security or somehow affect the actions of other investors for personal gain?

• A. Market manipulation
• B. Insider trading
• C. Freeriding
• D. Backing away

Correct Answer: A

Explanation:

A: Choice A is defined as using improper methods to increase or decrease the market price of a security or somehow affect the actions of other investors for personal gain. Choice B typically refers to placing an illegal order based on material nonpublic information that is not known to the public and may not significantly affect the market value of the security in that order. Choices C and D are only two types of market manipulation—neither is a broad enough definition.