Chapter 8 Practice Question Answers
- 1. Answer: C. FINRA wants firms to keep records of who is in charge of the account, as well as the customer’s identity and suitability information if recommendations are given to the customer. The customer’s educational background is not relevant here and is not required information on the form.
- 2. Answer: C. Parties to a joint tenants in common, or JTIC, account specify a percentage split among them when opening the account, and they have no rights of survivorship. So if William were to die, his percentage would be passed on to his estate in accordance with his will. If William and Ruth want the assets in the account to go to each other should one die, then they want a joint tenants with rights of survivorship (JTWROS) account.
- 3. Answer: B. Under an UTMA account, assets must be transferred to a minor by a specified age, which varies by state. Transfers in California, for example, may be delayed by contract as late as age 25.
- 4. Answer: B. Verification may be made for individuals with any government-issued photo ID—such as a passport, a driver’s license, a military ID, or a green card. A Social Security number cannot be used for this purpose. Non-documentary verification—such as information obtained from a consumer reporting agency or public database—is sometimes used to supplement the documentary evidence. For institutions, a proper document might be a business’s articles of incorporation or government-issued business license.
- 5. Answer: A. The broker-dealer must, immediately upon notification, cancel all open orders, freeze the account’s assets, and revoke any third-party power of attorney. The broker-dealer cannot release the deceased’s assets to an estate account until the executor presents the necessary documentation. This includes a letter testamentary verifying the identity of the executor and a certified copy of the death certificate.
- 6. Answer: C. In a JTIC account, the decea