Canadian Securities Course (CSC) Practice Exam

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Study for the Canadian Securities Course Exam with our comprehensive practice test. Explore flashcards and multiple-choice questions, each with detailed hints and explanations. Prepare for your CSC exam with confidence!

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What is "Front running" in the world of trading?

Executing orders for clients promptly
Buying stocks ahead of market trends
Putting a broker's own account order ahead of a customer's order for profit
Minimizing risk for clients

The correct answer is: Putting a broker's own account order ahead of a customer's order for profit

Front running in the world of trading refers to the unethical practice of a broker or trader buying or selling securities before executing a larger client order for their own profit. This is done by placing their own orders ahead of the client's, taking advantage of the expected market movement caused by the client's order. This action is considered illegal and is a form of insider trading. Options A, B, and D do not accurately describe front running and are therefore incorrect. Option A refers to prompt execution of client orders, option B refers to buying stocks based on market trends, and option D refers to minimizing risk for clients. None of these options address the unethical aspect of front running and its direct impact on a client's order.