SIE Understanding Products and Their Risks Question 35: Answer and Explanation

Question: 35

Which of the following describes a requirement in FINRA Rule 2261 - Disclosure of Financial Condition?

• A. When requested by a customer, the member broker firm provides its financial condition from its most recent balance sheet.
• B. When a customer purchases securities representing a 10% increase in his portfolio, the broker dealer automatically provides its most recent year-to-date income statement.
• C. When the member broker firm is owned by a parent company, whenever the parent company declares a dividend, the broker firm automatically provides the amount of dividend per share.
• D. When a customer opens a margin account, the broker dealer discloses the total amount of loans the broker dealer has outstanding to all customers.

Correct Answer: A

Explanation:

A: Choice A correctly describes a requirement of the rule. The disclosure of financial condition may be electronic or printed. Choices B, C, and D are not requirements of this rule.