A client wants steady income but also expresses interest in speculative technology stocks. The agent recommends a portfolio weighted 80% in junk bonds and 20% in tech start-ups. Under the USA, this is MOST likely:

AUnsuitable, because the client's desire for steady income outweighs speculative interest✓ Correct answer
BSuitable, as it reflects both objectives
COnly unsuitable if the client loses money
DSuitable if the client signs a risk acknowledgement

Explanation

Why A — Unsuitable, because the client's desire for steady income outweighs speculative interest

Suitability must be determined based on the client's primary objectives and risk tolerance (USA 412). Junk bonds and tech start-ups are both highly speculative, so the recommendation is not appropriate. B and D misapply suitability, and C is incorrect because suitability is not determined by outcome.

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