Question

After a client signs a discretionary account agreement, his registered representative decides to buy some stock for the client on margin. The registered representative should: (A) Obtain verbal permission from the client (B) Have the client sign a margin agreement (C) Have the client sign a margin agreement and get supervisory approval before the first margin trade. (D) Have the client sign a margin agreement and get supervisory approval within three business days of the first trade.

Answer 1

Answer:

C] Have the client sign a margin agreement and get supervisory approval before the first margin trade.

Explanation:

Discretionary account can be regarded as an investment account which gives enablement to an authorized broker to make buying and selling of securities even when the clients doesn't has consent about it for each trade. Though there must be a discretionary disclosure signed by client with the broker which will serves as documentation of the client's consent.

In a scenerio whereby After a client signs a discretionary account agreement, his registered representative decides to buy some stock for the client on margin. In this case, The registered representative should Have the client sign a margin agreement and get supervisory approval before the first margin trade.