Stock Advisor Stock Marketing Practices 3

Question 1

What is 'spoofing' in the context of stock trading?

Accepted Answer

Placing fake orders to manipulate prices

Answer

Spoofing involves placing orders with the intent to cancel them before execution to create false demand or supply.

Question 2

A 'limit order' instructs a broker to:

Accepted Answer

Buy or sell at a specified price or better

Answer

A limit order executes only at the specified price or a more favorable one, giving price control to the investor.

Question 3

What does 'suitability' require of a financial advisor recommending investments?

Accepted Answer

Recommendations must fit the client's needs and profile

Answer

The suitability standard requires advisors to recommend investments appropriate for a client's financial situation and goals.

Question 4

Which term describes spreading false rumors to drive a stock's price down for profit?

Accepted Answer

Bear raid

Answer

A bear raid is an illegal attempt to push a stock's price lower through coordinated selling and false negative information.

Question 5

What is the fiduciary duty owed by a registered investment advisor to clients?

Accepted Answer

Act in the client's best interest

Answer

A fiduciary must act in the client's best interest, placing the client's needs above their own.

Stock Advisor Practice Test