5-79 Which of the following is the practice that involves short-term trading of mutual funds seeking to take advantage of short- term discrepancies between the price of a mutual fund's shares and out-of-date values on the securities in the fund's portfolio?

Question

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Market timing involves buying and selling mutual funds in an effort to profit from short-term price discrepancies. This practice is generally discouraged by mutual fund companies because it can disrupt the fund's investment strategy and negatively impact long-term investors. Insider trading involves trading on non-public information, late trading involves trading mutual fund shares after the market has closed but receiving that day's price, directed brokerage involves mutual fund companies paying brokers to steer clients towards their funds, and spinning involves investment banks encouraging clients to buy new initial public offerings (IPOs) in exchange for shares of hot mutual funds managed by the bank.

5-79 Which of the Following Is the Practice That Involves