Series 10 Exam Question 20: Answer and Explanation

Question: 20

An investor has given his representative the authority to purchase and sell securities in his account without first consulting him. Which of the following is NOT true?

• A. The authority must be evidenced in writing.
• B. The account must be reviewed more frequently.
• C. All transactions must be approved by a principal prior to execution.
• D. The investor is bound by the transactions made by the representative.

Correct Answer: C

Explanation:

Transactions in discretionary accounts do not need to be approved prior to execution. The transactions need to be approved promptly.