Series 63: Exercise

Exercise

Answer true or false

1. 1. _ Churning cannot occur in a discretionary account.
2. 2. _ Agents generally cannot borrow money from or loan money to customers.
3. 3. _ For a margin account with a broker-dealer, a written agreement must be in place before any trades are made.
4. 4. _ An investment adviser would be allowed to enter into a performance-based arrangement with a client with $1.75 million in net worth and a private residence valued at $600,000.
5. 5. _ An investment adviser representative can only reveal confidential client information with the client’s consent.

Answers

1. 1. False. Churning, or excessive trading, can occur in both discretionary and non-discretionary accounts.
2. 2. True. Although they may borrow money from lending institutions, agents must not borrow money from or lend money to customers.
3. 3. False. For a margin account with a broker-dealer, a writt