SIE Customer Accounts and Suitability 1

Question 1

Which document must be completed before a new brokerage account is opened?

Accepted Answer

New Account Form (customer profile)

Answer

Options Disclosure Document

Answer

Regulation T margin agreement

Answer

SIPC membership form

Question 2

What is the 'suitability' obligation under FINRA rules?

Accepted Answer

Recommendations must be appropriate based on the customer's financial profile and objectives

Answer

Firms must offer the lowest-cost products available

Answer

All customers must be offered the same investment options

Answer

Brokers must guarantee a minimum return on recommendations

Question 3

A discretionary account allows a broker to:

Accepted Answer

Trade customer funds without prior approval for each transaction

Answer

Charge higher commissions than standard accounts

Answer

Bypass suitability requirements

Answer

Open accounts for minors without custodian approval

Question 4

A joint tenancy with right of survivorship (JTWROS) account means:

Accepted Answer

Upon one owner's death, their share passes to the surviving owner(s)

Answer

Each owner can only access their proportional share

Answer

The account is subject to probate upon any owner's death

Answer

Owners can designate different beneficiaries for their share

Question 5

What is the primary purpose of the USA PATRIOT Act requirement for customer identification programs (CIP)?

Accepted Answer

To verify customer identity and prevent money laundering

Answer

To prevent market manipulation

Answer

To prevent tax evasion on investment gains

Answer

To ensure customers meet accredited investor standards

Question 6

Under Regulation T, the initial margin requirement for purchasing equity securities is:

Accepted Answer

50%

Answer

25%

Answer

75%

Answer

100%