Series 7 Exam Question 137: Answer and Explanation

Question: 137

AylDec Corporation would like to open a cash account at Lightning Broker-Dealer. In order for AylDec to open the account, it would need to send Lightning a copy of its

• A. corporate charter
• B. corporate resolution
• C. both (A) and (B)
• D. neither (A) nor (B)

Correct Answer: B

Explanation:

B. For a corporation to open a cash account at a broker-dealer, the broker-dealer would need to receive a copy of the corporation's resolution. The corporate resolution lets the broker-dealer know who has trading authority over the account. If a corporation wants to open a margin account, the broker-dealer would need to also receive a copy of the corporation's charter (bylaws), which would let them know that trading on margin is spelled out in the corporation's rules.