5-80 Which practice is especially common in international funds as traders can exploit differences in time zones?

Question

Quizplus · Accepted Answer

Market timing is especially common in international funds as traders can exploit differences in time zones to try and make profitable trades. This involves buying and selling securities based on anticipated market movements due to news events or other factors that may have occurred while the market was closed in a different time zone. This practice can be risky if the trader's predictions are incorrect, but can also potentially yield high returns if done successfully. Directed brokerage, insider trading, late trading, and spinning are all unethical practices that are illegal or violate industry regulations.

5-80 Which Practice Is Especially Common in International Funds as Traders