SIE Customer Accounts and Suitability 2

Question 1

What is a Uniform Gifts to Minors Act (UGMA) account?

Accepted Answer

A custodial account holding assets for a minor, managed by an adult custodian

Answer

A retirement account for minors

Answer

A college savings account with tax benefits

Answer

A trust account requiring court oversight

Question 2

A margin call is issued when:

Accepted Answer

The equity in a margin account falls below the maintenance margin requirement

Answer

A customer exceeds the maximum position size

Answer

A broker wants to promote additional trading

Answer

A stock in the account pays a dividend

Question 3

Under FINRA's Best Execution rule, broker-dealers must:

Accepted Answer

Seek the most favorable terms reasonably available for customer orders

Answer

Execute all trades on the NYSE

Answer

Match any competitor's price

Answer

Execute large orders before small ones

Question 4

What is a power of attorney (POA) in a brokerage account context?

Accepted Answer

A written authorization for a third party to act on the account owner's behalf

Answer

A document allowing a minor to trade independently

Answer

A court order to freeze an account

Answer

A permission form for options trading

Question 5

SIPC (Securities Investor Protection Corporation) protects investors against:

Accepted Answer

Broker-dealer insolvency and missing customer assets

Answer

Market losses from bad investments

Answer

Fraud committed by the issuer of securities

Answer

Losses on options strategies

Question 6

A pattern day trader is defined as someone who executes how many or more day trades within five business days?

Accepted Answer

4

Answer

2

Answer

3

Answer

5