Series 63 practice questioneasySuitability Obligations
An agent recommends speculative options to a retired client with a low risk tolerance. What suitability standard is the agent violating under the USA?
- ACustomer-specific suitability✓ Correct answer
- BReasonable basis suitability
- CQuantitative suitability
- DBest execution
Explanation
Why A — Customer-specific suitability
Customer-specific suitability (USA Section 402) requires recommendations to match a client's risk tolerance and financial situation. Reasonable basis relates to the product itself, quantitative to excessive trading, and best execution to trade execution quality.
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