Ch 08: Customer Accounts
The purchase of a high-quality long-term municipal bond would MOST likely be subject to which of the following types of risk?
Inflationary risk
What is the maximum coverage afforded to an investor under SIPC?
$500,000 per separate customer of which $250,000 may be cash
Customer Account records must be maintained by a broker-dealer whether the account has been closed or has been transferred to another firm for
6 years
Assume Mr. John Henry wants to trade highly speculative securities and engage in other aggressive trading strategies at ABC Securities Corp. Which of the following describes ABC Securities Corp's suitability obligation in this case, under FINRA Rules?
ABC Securities Corp must not make any recommendation which is not consistent with Mr. Henry's financial needs and financial situation.
Which of the following is an example of hedging?
An investor has a large long stock position in ABC common shares and buys ABC put options.
Mary Jones opens an individual Cash Account and wants to allow her sister Janet Jones, to make all investment decisions on the account with her broker, Charles Foster. Which of the following documents are required?
New Account Form and Trading Authorization.
A client at your firm has given their registered representative limited trading authority over her account. If this is the case, which of the following are ACCURATE of this scenario?
No checks or withdrawals may be issued from the account in the RR's name. The account and orders made in the account are subject to the review of a principal of the firm on a frequent basis.
In a Uniform Gifts to Minor's Account, income received from investments and capital gains is the tax responsibility of the
Minor
Under the Uniform Gifts/Transfer to Minor's Act, the owner of the securities in the account is the
Minor
The Uniform Transfer to Minors Act allows gifts of cash or securities to be made to minors. One major benefit of an UGMA Account is which of the following?
Normally a lower tax will be levied on the earnings generated in the account.
A registered representative would be allowed to participate in a customer's profits and losses under which of the following circumstances?
The RR establishes a joint account with the customer
When working with clients and the suitability of investment recommendations to those clients which of the following would be the most important consideration?
The clients financial and investment objectives
Which of the following can be said if an individual or institutional investor is engaging in frequent trading activity in mutual funds?
The investor is using market timing to attempt to maximize results
the Uniform Gifts to Minors Act
The minor's Social Security number is provided for the account
Under the Uniform Gifts to Minors Act, securities given as a gift by the donor must be transferred in
The name of the custodian for the benefit of the minor
A customer may, without prior written authorization, give a registered representative authority to exercise discretion on an order with respect to which of the following?
Time & Price
A registered representative charges a separate fee for investment advice. This is acceptable only if the
registered rep is also an investment adviser representative
