Chapter 8 Practice Question Answers
1. Answer: C. FINRA requires that the representative learn about a new customer’s identity, investment experience, financial status, and investment objectives. The customer’s educational background is not particularly relevant here and is not required information for a new account form.
2. Answer: D. A customer’s signature is not required on the new account form. According to the PATRIOT Act, the full name, date of birth, and Social Security number or tax ID is required to open an account. If the Social Security number has been applied for but not yet received, the firm may open the account, but they must obtain the SSN in a reasonable time frame.
3. Answer: B. Customer account records must be updated at least every three years.
4. 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; however, that percentage would only be half of the account’s assets if that percentage had been specified. 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.
5. Answer: C. A joint tenants in common account provides that the deceased owner’s interests in the account pass to his estate. In a joint tenants with rights of survivorship account, those assets pass to the surviving owner. Tenancy by the entirety is only available to married couples and usually involves real estate.
6. Answer: B. Regulation S-P protects investors from potential identity theft by placing strict requirements on how their private information may be used.
7. Answer: A. UTMA and UGMA accounts may only have one custodian and one minor. It does not matter whether or not the custodian and minor are related.
8. Answ