SIE Exam Question 104: Answer and Explanation

Question: 104

Which of the following would be a red flag when opening an account for a new client?

  • A. No investment experience
  • B. High annual income, but little or no savings
  • C. Hesitant to give financial information
  • D. Nervous or anxious when answering questions about objectives for the account

Correct Answer: D

Explanation:

A person who acts nervously or anxiously when answering questions about their objectives would raise a red flag when opening an account for a new client. It is common to find new investors who have no experience in the financial markets. While having a client with poor spending habits is unfortunate, it is not a sign of acting in bad faith. Customers can sometimes be skeptical about providing personal details, especially financial information.

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