Trading, Accounts & Prohibited ActsQuestion 285 of 398
Two traders repeatedly buy and sell the same security to each other, with no change in beneficial ownership, to create the false appearance of active trading volume. This manipulation is known as:
a.Best execution
b.Dollar-cost averaging
c.Legitimate market making
d.Wash trading (matched orders)
Explanation
Wash trading and matched orders involve transactions that create the illusion of activity without real change in ownership, misleading other investors about supply, demand, or liquidity. Both are prohibited manipulative practices.
Law Reference: Securities Exchange Act of 1934Practice all 398 questions free — no signup required.
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