SIE practice questioneasyCustodian Role
A custodian bank that holds securities on behalf of an institutional investor is primarily responsible for:
- AUnderwriting new securities offerings
- BMaking investment decisions for the investor
- CProviding investment advice and research
- DSafekeeping of assets and processing of transactions✓ Correct answer
Explanation
Why D — Safekeeping of assets and processing of transactions
A custodian's primary role is the safekeeping of assets (securities and cash) and administrative functions such as settling trades, collecting dividends and interest, and providing reporting. Custodians do NOT make investment decisions or provide investment advice — that is the role of investment advisers and portfolio managers. Underwriting is performed by investment banks.
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