Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

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In which of the following instances is it permissible for an investment adviser to borrow money from a client?
  1. It is never permissible for an investment adviser to borrow money from a client.
  2. The investment adviser may borrow money from a client if the client is a bank.
  3. The investment adviser may borrow money from a client if the client is a close friend of the majority owner of the investment advisory firm.
  4. The investment adviser may borrow money in either of the scenarios described in B or C.
Explanation
Answer: B - It is only permissible for an investment adviser to borrow money from a client if that client is in the business of loaning money, as would be the case if the client is a bank, but not if the client is merely a close friend of the majority owner of the investment advisory firm.
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