Chapter 14 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 particularly relevant here and is not required information on the form.
2. Answer: C. Parties to a joint tenants in common account specify a percentage split among them when opening the account, and they have no rights of survivorship. If William were to die, his percentage is passed on to his estate in accordance with his own will. The two would have wanted a joint tenants with rights of survivorship account for Ruth to have had a right to William’s share upon his death.
3. Answer: B. Under an UTMA account, assets may be transferred to the minor they have been held for from the age of majority to no later than age 25. The older UGMA accounts required the assets to be transferred at the age of majority, which varies by state.
4. Answer: B. A durable power of attorney is effective until it is revoked in writing, and it survives the incapacitation of the grantor. In this case, should your customer suffer an injury that would render the customer mentally incompetent—something that could happen in a war—then only a durable power of attorney would permit the agent to continue to serve as agent.
5. Answer: D. It’s called a defined contribution plan because the company contributes to an employee’s retirement for a defined period of time (while the employee is employed with the employer) aft