Transactions wherein tax-exempt funds compete to purchase shares of stock just prior to their ex-dividend dates, thereby driving up the share prices, are referred to as

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This is commonly referred to as a "bed-and-breakfast deal," as the shares are purchased right before the ex-dividend date and then quickly sold, as if the investor had just "slept overnight" with the shares. This can be a strategy used by tax-exempt funds to generate additional income without incurring taxes on the dividend payments. This type of transaction is commonly known as a "bed-and-breakfast deal." This is because the tax-exempt funds purchase the shares just before the ex-dividend date to capture the dividend, and then sell the shares shortly after (i.e. the next day), like checking in and out of a hotel for one night (a bed-and-breakfast). This practice is considered controversial because it artificially inflates share prices and can distort the market.

Transactions Wherein Tax-Exempt Funds Compete to Purchase Shares of Stock