Unit 5 Opening & Servicing Customer Accounts

Question 1

What questions does FINRA REQUIRE too open an account

Answer 1

• Name
• DOB
• Address
• SSN if an individual
  
  • Tax ID number if other legal entity

Question 2

Whose signature is REQUIRED on the new account form.

Answer 2

The only signature required to open an account is a partner, officer, or manager (principal)

Question 3

What essential facts should a rep know about a customer

Answer 3

Current financial situation, present holdings, risk tolerance, needs and objectives.

Question 4

With new accounts, how long does the rep have to send the form to the customer

Answer 4

30 days

Question 5

Accounts can be opened with what type of ownership;

Answer 5

1. Individual
2. Joint
3. Corporate
4. Partnership

Question 6

What is trading authorization

Answer 6

Accounts may be opened with someone other than the owner having the authority to buy and sell securities. A.K.A Power of Attorney

Question 7

What are the primary types of trading authorization

Answer 7

1. Discretionary
2. Custodial
3. Fiduciary

Question 8

Name the trading authorization:
A Registered Rep (or some other person) has been given written authorization from a customer to make trading decisions for the customer.

Answer 8

Discretionary and the Principal must approve

Question 9

Name the trading authorization:

A competent adult has been designated to act on behalf of a child, who is the owner of the account

Answer 9

Custodial

Question 10

Name the trading authorization:

A third party has been legally appointed to prudently manage the account on behalf of another person or entity.

Answer 10

Fiduciary

Question 11

What payment methods are available for customers to trade for securities

Answer 11

• Cash account: customers pay the full purchase price of the securities
• Margin account: Allow customers to borrow part of the security’s purchase price through the broker/dealer