A:

A. When the transaction is less than $5,000
B. When the IA decides only how many shares to sell
C. When the client tells the IA which stock he or she wants to sell
D. When the IA decides only the time and/or price to complete the sale


The correct answer is "d": time and price only. If the IA were to decide which security to sell or the number of shares to sell before receiving written discretionary authority, it would be considered an unethical business practice.

RELATED FAQS
  1. Type Of Return

    A client asks an IA to calculate what rate of return must be earned to grow $10,000 to $25,000 in five years. The rate of ... Read Answer >>
  2. What is the difference between IAS and GAAP?

    To answer this question, we must first define what IAS and GAAP are, in order to get a better grasp of the function they ... Read Answer >>
  3. The primary reason for an IA to rebalance a client’s portfolio is to:

    A. ensure the portfolio matches the asset allocation chosen for the client's risk tolerance and objectives. B. increase portfolio ... Read Answer >>
  4. When is it acceptable for a broker to commingle funds with a client?

    a. Never b. When he or she has written approval from the firm c. When he or she has written approval from the firm AND contributes ... Read Answer >>
Related Articles
  1. Investing

    How Google & Twitter Compete with Facebook's Instant Articles (FB, GOOG)

    Look at how Facebook's Instant Articles feature works, and how it differs from the new Accelerated Mobile Pages feature from Google and Twitter.
  2. Tech

    An Inside Look At Internal Auditors

    Find out why these number crunchers are part of every chief officer's dream team.
  3. Financial Advisor

    The 6 Biggest Life Insurance Companies in Canada (GWO.TO, SLF)

    Read about the biggest life insurance companies in Canada, and learn about their business operations and the types of products they offer.
  4. Financial Advisor

    Losing a Client Is Not Always The End of The World

    Losing a client is never pleasant for a financial advisor, but sometimes this is a better outcome than continuing the relationship.
  5. Financial Advisor

    Manage Your Clients' Expectations

    You can't control how they react to the market, but you can help them understand the reality of the situation.
  6. Financial Advisor

    3 Reasons to Fire Your Advisor

    There is no reason for a client to stay with a financial advisor who is not serving his or her needs. Here are some red flags to look out for.
  7. Financial Advisor

    Top 6 Things to Tell Clients in a Falling Market

    Here are six things to remind clients when the stock market tanks.
  8. Financial Advisor

    4 Strategies to Handle Clients Who Ignore Advice

    Working with clients that ignore your advice can be frustrating. Here are four ways to approach the situation.
  9. Taxes

    2015 Capital Gains Taxes: What You Should Know

    What financial advisors (and their clients) need to know about capital gains taxes in 2015.
  10. Tech

    Advisors Need to Talk Less, Ask and Listen More

    Financial advisors spend a lot of time giving their clients advice on how to invest their money. But what they often forget to do is listen.
RELATED TERMS
  1. Onerous Contract

    A type of contract where the costs involved with fulfilling the ...
  2. Eric S. Maskin

    An American professor of social science at the Institute for ...
  3. International Accounting Standards - IAS

    An older set of standards stating how particular types of transactions ...
  4. Discretionary Investment Management

    A form of investment management in which buy and sell decisions ...
  5. Discretionary Account

    An account that allows a broker to buy and sell securities without ...
  6. Acquisition Accounting

    A set of formal guidelines describing how assets, liabilities, ...
Hot Definitions
  1. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  2. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  3. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  4. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  5. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  6. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
Trading Center