Q4. All of the following are violations of Standard II(B), Market Manipulation, EXCEPT:

A)   securing a controlling interest in an equity security in order to influence the price of a related derivative instrument.

B)   exploiting differences in market inefficiencies.

C)   disseminating misleading information about the development of new products and technologies.

Q5. Steve Waters, a CFA Level I candidate, has decided to enter into a long position of Farmco stock. Since Farmco is thinly traded, Waters is concerned the order will overwhelm the liquidity of Farmco and the price will surge. Waters engages in a series of block trades in order to accomplish the purchase. According to Standard II(B), Market Manipulation, Waters has engaged in:

A)   transaction-based manipulation, but not information-based manipulation.

B)   neither transaction-based manipulation nor information-based manipulation.

C)   both transaction-based manipulation and information-based manipulation.

答案和详解如下：

Q4. All of the following are violations of Standard II(B), Market Manipulation, EXCEPT:

A)   securing a controlling interest in an equity security in order to influence the price of a related derivative instrument.

B)   exploiting differences in market inefficiencies.

C)   disseminating misleading information about the development of new products and technologies.

Correct answer is B)

Standard II(B), Market Manipulation, prohibits practices that distort prices or artificially inflate trading volumes with the intent to mislead market participants. The Standard is not intended to prohibit legitimate trading strategies that exploit differences in market inefficiencies.

Q5. Steve Waters, a CFA Level I candidate, has decided to enter into a long position of Farmco stock. Since Farmco is thinly traded, Waters is concerned the order will overwhelm the liquidity of Farmco and the price will surge. Waters engages in a series of block trades in order to accomplish the purchase. According to Standard II(B), Market Manipulation, Waters has engaged in:

A)   transaction-based manipulation, but not information-based manipulation.

B)   neither transaction-based manipulation nor information-based manipulation.

C)   both transaction-based manipulation and information-based manipulation.

Correct answer is B)

Waters is not in violation of Standard II(B), Market Manipulation. Transaction-based manipulation includes, but is not limited to, transactions that artificially distort prices or volume. Information-based manipulation includes, but is not limited to, spreading false rumors about a firm in order to induce others to trade.

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