SIE (Securities Industry Essentials) Practice Exam

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What does Regulation SHO severely restrict?

  1. Initial Public Offerings

  2. Short selling during the cooling-off period of a follow-on offering

  3. Day trading activities

  4. Margin trading

The correct answer is: Short selling during the cooling-off period of a follow-on offering

Regulation SHO restricts short selling during the cooling-off period of a follow-on offering. The other options are incorrect because - Option A: Regulation SHO does not restrict Initial Public Offerings (IPOs). Instead, it focuses on regulating short selling and fails-to-deliver positions. - Option C: While the regulation does regulate short selling, it does not restrict day trading activities. - Option D: Similarly, Regulation SHO does not specifically restrict margin trading.

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