Customer Accounts and Suitability Flashcards
6 cards from real SIE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Customer Accounts and Suitability flashcards as text
Which document must be completed before a new brokerage account is opened?
Answer: New Account Form (customer profile)
A new account form collecting the customer's financial information, investment objectives, and risk tolerance must be completed before trading.
What is the 'suitability' obligation under FINRA rules?
Answer: Recommendations must be appropriate based on the customer's financial profile and objectives
FINRA's suitability rule requires that investment recommendations be appropriate for the specific customer based on their financial situation and goals.
A discretionary account allows a broker to:
Answer: Trade customer funds without prior approval for each transaction
Discretionary accounts grant the broker written authority to make trades without contacting the customer for each decision.
A joint tenancy with right of survivorship (JTWROS) account means:
Answer: Upon one owner's death, their share passes to the surviving owner(s)
In a JTWROS account, when one owner dies, ownership automatically passes to the surviving account holder(s) outside of probate.
What is the primary purpose of the USA PATRIOT Act requirement for customer identification programs (CIP)?
Answer: To verify customer identity and prevent money laundering
CIP requirements under the PATRIOT Act require firms to verify customer identity to combat money laundering and terrorist financing.
Under Regulation T, the initial margin requirement for purchasing equity securities is:
Answer: 50%
Regulation T, set by the Federal Reserve, requires customers to deposit at least 50% of the purchase price of marginable securities.