Question

The FINRA suitability rule requires all of the following EXCEPT: A Before a product or strategy can be recommended, a reasonable basis suitability determination must be completed, evaluating the investment's features, returns, costs and risks B Before a product or strategy can be recommended to a customer, it must be determined that the investment is suitable, based on that client's new account profile C Before a product or strategy can be recommended to a customer, it must be determined that the customer has the ability to meet the financial commitment required by the recommendation D Before a product or strategy can be recommended, the registered representative must understand and be able protect the client against the product's inherent risks

Answer 1

Answer: D. Before a product or strategy can be recommended, the registered representative must understand and be able protect the client against the product's inherent risks

Explanation:

There are some reviews with regards to FINRA suitability determinations whihc include:

• Reasonable Basis Suitability: This implies that after there has been a review of the returns, risks and costs of a product, the ones that has the best combination should be recommended.

Also, before a product can be recommended to a customer, the customer must be able to meet the financial commitment. The statement that "Before a product or strategy can be recommended, the registered representative must understand and be able protect the client against the product's inherent risks" is incorrect.