SIE practice questionmediumOptions Strategies
A registered rep recommends an uncovered options strategy to a conservative investor without discussing risks. This is:
- AAllowed for experienced investors only
- BAcceptable if the client agrees
- CProhibited as unsuitable and a violation of best interest standards✓ Correct answer
- DOnly a concern for institutional accounts
Explanation
Why C — Prohibited as unsuitable and a violation of best interest standards
Recommendations must be suitable and in the client's best interest. Uncovered options are high-risk and unsuitable for conservative investors, regardless of client agreement or account type.
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