Question

which of the following are discretionary orders? a customer sends a check for $25,000 to an agent and instructs the agent to purchase bank and insurance company stocks when the price appears favorable. a customer instructs an agent to buy 1,000 shares of abc corporation at a time or price determined by the agent. a customer instructs an agent to purchase as many shares of xyz as the agent considers appropriate. a customer instructs an agent to sell 300 shares of lmn, inc., when the agent deems the time or price appropriate.

Answer 1

Discretion authorizes a representative to choose the security, the amount of shares, or whether to buy or sell. Time and/or price alone are not discretionary decisions.

What are  discretionary orders?

Orders that a broker can handle on a client's behalf with some discretion without getting that client's express approval for every single order choice or detail are known as discretionary orders.

Conditional orders most frequently involve discretion, such adjusting the limit price in reaction to shifting market conditions.

In discretionary investment management, when a broker or adviser makes transactions on behalf of a customer without receiving their approval beforehand, discretionary orders are another essential element.

When a broker places a discretionary order, they are exempt from liability for any possible losses that their client may incur as long as they are acting in good faith and seeking the best execution.

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