P1 Unit 2 - Necessary Suitability Info & Approvals Flashcards
1
Q
- this rule is composed of three main obligations:
1. Reasonable-Basis Suitability
2. Customer-Specific Suitability
3. Quantitative Suitability
A
Rule 2111
2
Q
- this type of suitability was established with Rule 2111.
- this requires the registered rep to have reasonable basis to believe that a recommendation is suitable for at least some investors.
A
Reasonable Basis Suitability
3
Q
- this type of suitability was established with Rule 2111.
-the registered rep has to have a reasonable basis that the recommendation is suitable for a specific customer based on their investment profile.
A
Customer Specific Suitability
4
Q
- this type of suitability was established with Rule 2111.
- the registered rep has to have a reasonable basis for believing that a series of recommended transactions, even if suitable when viewed in isolation, are not excessive and unsuitable for the customer when taken together.
A
Quantitative Suitability
5
Q
- this agreement gives the broker dealer a lien on the customer’s margin securities
A
Hypothecation Agreement
6
Q
- this account is established for businesses. The registered rep must establish the following to open this type of account:
1. the business’s legal right to open an investment account
2. an indication of any limitations that the owners, the stockholders, a court, or any other entity has placed on the securities in which the business can invest
3. who will represent the business in transactions involving the account - the firm must obtain a copy of the corporate charter, as well as a corporate resolution. The charter is proof that the business does exist, and the resolution authorizes both the opening of the account and the officers designated to enter orders.
A
Corporate Account
7
Q
- this type of account requires a partnership agreement that states which of the partners can make transactions for the account.
A
Partnership Account
