A customer with liquid net worth of $25,000 tells an agent that she has $1,000 to invest. Explaining how diversification can reduce risk, the agent recommends that the customer purchase eight different over-the-counter stocks, each trading at approximately $1 per share. With regard to the above situation:
the recommendation is suitable for the customer because the agent recommends a diversified stock portfolio.
high-risk penny stocks are not suitable recommendations for this low net worth customer.
the agent may be exhibiting a pattern of excessive commissions (churning) in his customer's account.
once the customer agrees to the agent's recommendation, it is no longer considered an unsolicited transaction.
A) II only.
B) III and IV.
C) II and III.
D) I and IV.
Answer: II only.