13. What is Front Running?

 

  • A broker, after receiving a large order from a client, purchases many shares of that stock for herself first (or tells her friends to do so) knowing that this order will cause the price to go up.
  • A broker, after receiving a large order from a client, purchases all of the shares at the same time, causing the price of the stock to fluctuate and creating instability in the price of the stock.
  • A broker uses decimalization, or the fact that stocks are traded in pennies instead of 1/16ths of a dollar, to take advantage of other investors.
  • A broker temporarily invests a client’s entire portfolio in a single investment so that the price goes up, and then sells it quickly with the higher price.
Other Questions Of This Category

Global Financial Markets and Instruments Quiz

Internet History Technology Security Quiz

Alternative Approaches to Valuation and Investment

Principles of Corporate Finance A Tale of Value

Corporate Financial Decision Making for Value Creation

Behavioral Finance Quiz

Securing Investment Returns in the Long Run Quiz

Mergers and Acquisitions The Relentless Pursuit of Synergy

First Step Korean Quiz

Moralities of Everyday Life Quiz

Strategic Organization Design Coursera

You meet the following 4 investors and each have their own beliefs:

Trading Algorithms Quiz

High Stakes Leadership Leading

Distributed Programming in Java Quiz