SIE practice questionmediumSuitability and Prohibited Activities
Recommending frequent mutual fund exchanges solely to generate commissions is known as:
- ADollar-cost averaging
- BProper rebalancing
- CChurning, a prohibited activity✓ Correct answer
- DRegulation S compliance
Explanation
Why C — Churning, a prohibited activity
Inducing excessive trading to create commissions is churning and violates the suitability rule. Rebalancing and dollar-cost averaging are legitimate, while Regulation S relates to offshore securities.
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