SIE Exam Question 520: Answer and Explanation

Question: 520

Which of the following is true?

• A. A registered representative may not use the pending dividend payment as the sole basis for recommending a stock purchase.
• B. If an investor buys shares just prior to the ex date, he will have his investment money returned.
• C. After an investor's money is returned, the investor is still liable for taxes on the dividend amount.
• D. All of the above.

Correct Answer: D

Explanation:

D: Using the pending dividend to create an urgency on the part of the investor to purchase this stock is a perfect example of this violation, and the results are listed in the first three answers.