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Late Trading
Late trading of mutual fund shares occurs when investors placing trades after 4 PM receive the 4 PM price.
These late traders can use the information revealed after 4 PM to guide their trades: buying funds when their current value is greater than their 4 PM value and selling the funds when the reverse is true.
Doing so allows them to earn expected abnormal returns at the expense of the fund's long-term shareholders.
Submitted by: admin
Added: Thu May 25 2006
