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netineya [11]
3 years ago
14

The duty of a broker-dealer firm and its individual brokers to ensure that investment recommendations made to customers are suit

able based on a specific customer's investment profile includes all of the following except: (A) Have a reasonable basis for the belief that the recommendation is suitable (B) The belief is based on customer-specific information (C) The size of the recommended trade must not be excessive (D) Refrain from making an investment recommendation if the customer refuses to provide certain customer specific information.
Business
1 answer:
Alex_Xolod [135]3 years ago
7 0

Answer:

The answer is option "D"

Explanation:

The suitability condition that broker-dealer firms have to adopt includes making investment recommendations on the basis of their applicability in terms of what the customer's profile is. To do this, the firm needs to have adequate and reasonable understanding of the customer, their needs, their risk profile, details of their other investments and their age among several other factors. Firms use these details and then perform their own research, or 'due diligence' to ensure that the recommendations made are appropriate in the customer's context. Options A and B pertain to this criteria and are therefore correct. Option C is also correct since, even if the investment recommendation is in line with the customer's profile, firms must still refrain from making trade recommendations that are excessive in size because they can, among other issues, raise the risk profile of the trade.

Now lets look at option D. Broker-dealers do rely on the customers providing customer specific information so that they can plan investment recommendations accordingly, however, this is not the only practice that is required. Firms need to conduct their own research and due diligence as well. Furthermore, customers may be unwilling to disclose certain information, for example, details of their other investments. In this case, firms need to be cautious and carefully analyse whether they have 'enough' customer specific information to be reasonably certain that the investment recommendation is appropriate. As long as enough information exists to form the reasonable basis, firms do not need to refrain from making recommendations.

Therefore, the correct option is D.

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The journal entry for the issuance of bonds for cash on January 1 is: Debit Cash $2,700,000, Credit Bonds payable $2,700,000.

<h3>Journal entry</h3>

1. January 1

Debit Cash $2,700,000

Credit Bonds payable $2,700,000

(To record  issuance of bonds for cash)

2. June 30

Debit bond  Interest expense $81,000

Credit Cash $81,000

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(To record  first semiannual interest payment)

December 31

Debit bond  Interest expense $81,000

Credit Cash $81,000

($2,700,000×6%/2)

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3. December 31, 2021

Debit Bonds payable $2,700,000

Credit Cash $2,700,000

(To record  payment of bonds payable)

Therefore the journal entry for the issuance of bonds for cash on January 1 is: Debit Cash $2,700,000, Credit Bonds payable $2,700,000.

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We observe that total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units. Which of the follow
iren2701 [21]

Answer:

c. Fixed Cost = $300

Explanation:

Because marginal cost is constant we can find the variable cost per unit and then subtract the total variable cost from the total cost in order to find the fixed cost. The firms total cost increase $300 (from 1500 to 1800) when output increases by 10 units (from 40 to 50), so the variable cost per unit is 300/10=30.

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Cullumber Inc. had sales of $2,300,000 for the first quarter of 2020. In making the sales, the company incurred the following co
yarga [219]

Answer:

<u>Net Income  $ 494,000</u>

Explanation:

Cullumber Inc.

CVP income statement

For the Quarter Ended March 31, 2020.

Sales of $2,300,000

Variable

Cost of goods sold $941,000

Selling expenses 104,000

Administrative expenses 108,000

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