Exercise
Answer true or false.
1. Full trading authority allows a third party to trade in an account and withdraw funds from the account.
2. After a married couple signs a joint party agreement upon opening a joint account, both parties are able to make transactions in the account without permission from the other.
3. Omnibus accounts are for investors who wish to have more than one type of account, such as an individual margin account and a joint cash account.
Choose the best answer.
4. Joan is a registered representative who has Alfred as a customer. Joan does not have discretionary authority over Alfred’s account. Which of the following can Joan do?
A. Decide which stocks to purchase for Alfred’s account
B. Decide the time and price at which to execute a trade called in by Alfred, with his verbal authorization
C. Decide whether or not to execute a trade called in by Alfred, with his verbal authorization
D. Decide how much of a stock to purchase, as long as Alfred tells her which stock he wants
5. Tony signs a discretionary authorization form allowing his broker-dealer to open a discretionary account for him. Rory, the agent responsible for the discretionary account, is reviewing Tony’s holdings in Stock XYZ. Which of the following is Rory not allowed to do without contacting Tony?
A. Purchase more XYZ stock for Tony’s account
B. Purchase an XYZ block trade for Tony’s account
C. Sell all of Tony’s XYZ stock
D. Place an XYZ order for his own account ahead of an XYZ block trade for Tony’s account
Answers
1. True. Full trading authority allows a third party to trade and make withdrawals and make trade decisions w