SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 17: Answer and Explanation

Question: 17

Which is the highest obligation of a securities professional?

• A. Most favorable price
• B. Suitability
• C. Best interest
• D. Highest return on investment

Correct Answer: C

Explanation:

C: Choice C describes the highest obligation of a securities professional. Recommendations of security trades or investment strategies are to be made according to what is in the client's best interest, and without regard to the effect on the securities professional's compensation. Choice A may be a part of serving the customer's best interest, but the selection of the wrong security obtained at the most favorable price may not be in the consumer's best interest. Choice B is a standard that requires an investment be appropriate for some persons, and to be appropriate for the specific consumer, but does not necessarily reflect what is in the specific consumer's best interest. Choice D, high return on investment, may be part of a consumer's goal. However, an annuity may have the highest return, but its surrender fee may make it not in the consumer's best interest.