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CPH > Chap 5, Sec 2: The Account Application > Flashcards

Chap 5, Sec 2: The Account Application Flashcards

1
Q

The account application is a critically important document and represents, in most instances, the ___________ of the client relationship.

A

Beginning

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2
Q

The account application is the contract for services between the ________________ and the ____________.

A

Dealer Member and the Client

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3
Q

The account application, in most cases, is executed by the RR on behalf of the dealer member, and it must include the following items:

A
  • The client’s identity, including his or her full name, address, citizenship, and social insurance number
  • Personal information, such as the client’s marital status, number of dependents, and employment
  • Personal financial information, including the client’s income, net worth, and liquidity
  • The client’s investment objectives, risk profile, and level of knowledge about investing
  • Information about the client’s relationship with any publicly traded companies (i.e., insider status)
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4
Q

When you have completed, reviewed, and signed the account application form, it must be approved by the ___________________.

A

Designated Supervisor

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5
Q

In addition to forming the basis for the legal relationship, the account application is used for four main purposes:

A
  • To establish the identity of the client
  • To collect sufficient info to meet suitability obligations, such as the client’s investment objectives
  • To judge the client’s creditworthiness
  • To determine whether the client is an insider of a reporting issuer or other publicly traded company.
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6
Q

In addition to completing an account application for all new clients, you should update existing account applications regularly and whenever a ____________ occurs in a client’s circumstances.

A

significant change

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7
Q

Any significant change in circumstances could affect the client’s ________ ________, ____________, or ____ _________.

A

investment objectives, creditworthiness, risk tolerance

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8
Q

At a minimum, you should have _______ discussions to re-confirm that the information contained on the account application is still accurate.

A

Annual

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9
Q

It is not enough to simply know your client; you must be able to…..

A

demonstrate your knowledge of the client

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10
Q

There are three general categories of info required on the account applicaiton:

A
  • Client info
  • Account Info
  • Registrant info
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11
Q

Only Canadian citizen residents in Canada can purchase certain percentages or number of shares of companies that are considered culturally or economically important to Canada, are known as _________ _________ companies, which include, for example, __________ or _________.

A

Constrained Share Companies

Broadcasting Companies or Banks

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12
Q

Employment info is required for three reasons:

A
  1. To help establish the client’s creditworthiness
  2. to establish whether any regulator issues to this account, such the requirement to report insider status
  3. To evaluate the client’s ability to withstand losses, and, thus, whether specific investment objectives are warranted.
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13
Q

Financial information is fundamental in judging a client’s creditworthiness if credit is to be extended. It is also a major factor when establishing the….

A

suitability of investment recommendations

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14
Q

Risk tolerance is the….

Risk capacity is the …….

A

Risk tolerance is the willingness to accept risk

Risk capacity is the ability to endure loss.

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15
Q

Account information consists of the 5 following concepts:

A
  • Account Type
  • Beneficial Ownership
  • Currency
  • Payment/delivery procedures
  • Special instructions
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16
Q

_________ accounts require the client to deposit payment in full for each purchased transaction.

A

Cash

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17
Q

_________ accounts require only partial payment for purchases.

A

Margin

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18
Q

The client must make an initial deposit of a specified

portion of the value of the securities purchased, which is called the ______ ________.

A

Client Margin

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19
Q

Because margin accounts involve a loan by the dealer member to the client, a financing agreement, called a _______ _________, must be completed before the account is approved.

A

margin agreement

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20
Q

________________ accounts involve the purchase of securities and payment on settlement date.

A

Delivery against payment (DAP)

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21
Q

In this type of account, an intermediary, usually a financial institution, often acts as an agent to complete these transactions for the client. The dealer member delivers the securities to the purchaser, or the purchaser’s settlement agent, who then pays for the securities in full.

A

Delivery Against Payment (DAP)

22
Q

Like cash accounts _____________ accounts are subject to the Cash Account Rule.

A

Delivery Against Payment (DAP)

23
Q

________ accounts must be operated in accordance with the industry’ Cash Account Rule.

A

Cash Accounts

24
Q

This type of account involves the sale of securities and the receipt of payment on settlement date. The dealer member receives the securities from the client (or agent) and pays the client (or agent) in full.

A

Receipt against payment (RAP)

25
Q

It is a generally accepted industry practice that all employees of a dealer member or a related company and any of their family members living under the same roof are considered to be non-clients. The common name for an account belonging to a non-client is a _______ account

A

Pro Account

26
Q

When setting up an investment club account, a specific document, called an ___________ ______ __________, must accompany the standard application

A

Investment Club Agreement

27
Q

If the registrant handling the account is also a member of the investment club, the account automatically becomes a ______ account.

A

Pro

28
Q

A ___________ account is one where discretionary authority has not been solicited, but where the client chooses to give it on a temporary basis.

A

Discretionary account

29
Q

Clients must clearly indicate their reason for requesting the discretion, such as in the case of __________ or…….

A

illness or absence from the country.

30
Q

Discretionary authority is valid for a maximum term of ___________

A

12 months

31
Q

Any order in which the client has not clearly articulated any one of the following information: The security, the quantity, the price, and the length of time the order is good for.

A

Discretionary Order

32
Q

A __________ ___________ must review, at least _________, the financial performance of all discretionary accounts.

A

Designated Supervisor

Monthly

33
Q

Both the client and the dealer member may withdraw from the discretionary or managed account agreement, but the dealer has to give _____ days notice.

A

30 days

34
Q

________ _________ grant discretionary authority on an ongoing basis; in other words, it is permanent.

A

Managed Account

35
Q

No dealer member or any person acting on its behalf is permitted to exercise discretionary authority over these accounts, unless approved by IIROC as a ______ or __________ ____

A

PM or Associate PM

36
Q

In order for the dealer member to approve a managed account, the client must sign a _________ _______ _________ , and the dealer member’s Designated Supervisor must accept it.

A

managed account agreement

37
Q

These accounts may be solicited.

A

Managed accounts

38
Q

Each managed account must be reviewed _________ by a __________ _________ to ensure that the client’s investment objectives are diligently pursued.

A

Quarterly

Designated Supervisor

39
Q

When dealing with securities in a different currency, you must verify that your clients are aware that, in addition to investment risk, an investment denomination in a foreign currency also carries _______ ______

A

Currency Risk

40
Q

Other than in connection with a bona fide ___________ __________ _________ account, any request for payment or receipt of funds to a third party is a warning flag, and management should be consulted

A

Delivery Against Payment

41
Q

In the case of discretionary accounts, orders should be marked _____ only if the RR has some type of beneficial interest in the account.

A

Pro

42
Q

If a person owns more than a certain percentage of a class of voting or equity shares of an issuer (usually _____), then that person is generally considered to be an insider.

A

10%

43
Q

A control person is a person who generally owns

more than ______ of an issuer’s equity and therefore has significant influence over that company.

A

20%

44
Q

Insiders must report their trades within ____days after the date of the trade. You should remind your clients of their obligation to file insider reports

A

10

45
Q

When you pass inside info on to someone, it is called ________.

A

Tipping

46
Q

There is often a _________ _________ _________ form to accommodate one person appointing another person to act on their behalf.

A

Standard Trading Authority Form

47
Q

The approval necessary to have full authority over someone elses account.

A

Power of Attorney

48
Q

What is the main reason that a client’s SIN is required by the dealer member?

A

To satisfy tax reporting requirments

49
Q

When must the info disclosure for a strip bond be provided to clients?

A

Prior to the first trade

50
Q

What information does the Relationship Disclosure Document provide about the dealer member?

A

The types of products and services offered by the dealer

CPH (9 decks)

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