SIE practice questionhardOptions - Prohibited Recommendation
A rep encourages a client to purchase uncovered options beyond the client’s stated risk tolerance and financial resources. This is an example of:
- AMarket timing
- BA hedging strategy
- CPermitted in margin accounts only
- DA prohibited, unsuitable recommendation✓ Correct answer
Explanation
Why D — A prohibited, unsuitable recommendation
Recommending strategies beyond a client’s risk tolerance violates suitability and is prohibited. Suitability applies regardless of account type or investment strategy.
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