SIE Exam Question 187: Answer and Explanation

Question: 187

Selling a security to generate a loss and then immediately buying the security back is a _________.

• A. Capital loss
• B. Whipsaw
• C. Wash sale
• D. Tax loss sale

Correct Answer: C

Explanation:

A wash sale is defined as selling a security to generate a loss and then immediately buying the security back. It does not qualify as a capital loss (or tax loss sale) to reduce an individual's taxes.