Stock Advisor Stock Marketing Practices 4

Question 1

What does 'Regulation FD' (Fair Disclosure) prohibit?

Accepted Answer

Selective disclosure of material information to some investors

Answer

Regulation FD requires companies to disclose material information to all investors simultaneously, not selectively.

Question 2

A 'stop-loss order' is designed to:

Accepted Answer

Limit losses by selling at a set trigger price

Answer

A stop-loss order automatically sells a security when it reaches a specified price to cap potential losses.

Question 3

What is 'cornering the market'?

Accepted Answer

Gaining enough control to manipulate a security's price

Answer

Cornering the market means acquiring enough of an asset to control and manipulate its price, which is illegal.

Question 4

Under the 'Know Your Customer' (KYC) rule, a broker must:

Accepted Answer

Understand a client's financial profile and risk tolerance

Answer

KYC rules require brokers to gather information about a client's financial situation, objectives, and risk tolerance.

Question 5

What is a 'short squeeze'?

Accepted Answer

Rising prices forcing short sellers to buy back shares

Answer

A short squeeze occurs when a rising price forces short sellers to cover positions, pushing the price even higher.

Stock Advisor Practice Test