Churning Is the Practice of Encouraging Investors to Make Multiple

question 8

True/False

Churning is the practice of encouraging investors to make multiple unnecessary trades in order to create extra income for the broker. Because it benefits a few at the expense of the many, churning violates the utility principle.

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Definitions:

Membership Homogeneity

The degree to which members of a group, organization, or category share similar characteristics or attributes.

Competition

The rivalry between two or more entities to achieve superiority in a specific area.

Norming Stage

is a phase in team development where members resolve conflicts, establish norms, and develop stronger bonds, leading to a more cohesive and efficient working group.

Team Development

The process through which a group of individuals grows to become a cohesive unit, optimizing collaboration, communication, and performance toward achieving shared goals.