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.