Chapter 14 - Customer Accounts Flashcards
Allows cash and securities to be withdrawn from a discretionary account.
Full trading authority
(True or False) If a customer specifies the security, the quantity, and whether to buy or sell, the broker can determine when to execute the trade on that day.
True
The Reg T margin requirement for short sales is ___%.
50%
What is the maximum annual IRA contribution for a 58-year-old who only has investment income?
$0 because he has no earned income
When must clients be given an Option Disclosure Document?
At or prior to account approval
Joan invests $15,000 in a qualified annuity. At age 64, she withdraws all $22,000. What’s Joan’s basis and what’s taxed?
Her basis is zero, since the annuity is qualified (funded pretax) and the entire $22,000 is taxed as ordinary income.
Document that allows a broker-dealer to lend customer securities to someone wishing to sell them short.
Loan Consent Agreement
Federal law that requires employers to provide a high degree of fiduciary responsibility to group plan participants.
The Employee Retirement Income Security Act (ERISA)
Describe the customer’s pledging of securities as collateral to the broker-dealer.
Hypothecation Agreement
Plan that uses pre-tax contributions and the growth of the account is tax-deferred.
A 401(K)
To enter discretionary orders, a client’s authorization must be obtained:
in writing
The right an employee gradually acquires by length of service at a company to receive employer-contributed benefits.
Vesting
A margin disclosure document must be provided to a client:
at the time the account is opened
A withdrawal of up to $____ may be taken without penalty from an IRA for a first-time purchase of a home.
$10,000
An individual retirement account in which the money grows tax-deferred.
Traditional IRA account
