have an account?【sign in】all of the following are examples of market manipulation except
bartoauthorMarket manipulation is a controversial practice in which individuals or institutions attempt to artificially influence the price or volume of a security or commodity. This article will discuss various examples of market manipulation and their impact on the market.
Example 1: Manipulation through stock purchases
One of the most common methods of market manipulation is through stock purchases. Investors can buy large amounts of shares in a company, causing the price to rise. This can be done intentionally or through an unintended chain reaction. For example, a large investor buying shares in a company may lead other investors to assume that there is strong demand for the stock, causing its price to rise.
Example 2: Manipulation through short sales
Short sales involve selling securities that the seller does not own, with the intention of later purchasing them at a lower price in order to return the securities to the original owner. Short sellers can also manipulate the market by selling large amounts of securities, causing the price to fall. This can lead other investors to believe that the market is overvalued, causing more securities to be sold and the price to continue to fall.
Example 3: Manipulation through price rigging
Price rigging is another form of market manipulation, involving several market participants colluding to set the price of a security or commodity at an artificial level. This can be done through electronic trading platforms or through informal agreements among market participants. Price rigging can have severe consequences, including loss of trust in the market and potential economic damage.
Example 4: Manipulation through media coverage
Media coverage can also be used to manipulate the market. Companies or individuals can pay for favorable coverage, which can artificially inflate the value of a stock or cause it to fall. This can lead other investors to make decisions based on inaccurate or biased information.
Example 5: Manipulation through legal or regulatory channels
Legal or regulatory channels can also be used to manipulate the market. Governments and regulatory bodies can set rules and regulations that favor certain investors or institutions, causing the market to favor those entities. This can lead to unfair competition and potential damage to other market participants.
While market manipulation is a controversial practice, it is important to understand its impact on the market and how it can lead to unfair competition and potential damage to other market participants. By understanding the various forms of market manipulation, investors and regulatory bodies can work together to create a more fair and transparent market.