Which of the following mutual funds should an investment adviser representative recommend to a corporate client whose objective is current income with moderate risk?

A) Preferred stock fund.

B) Aggressive growth fund.

C) Money market fund.

D) High-yield bond fund.

A) Preferred stock fund.

Answer: A

An investor diversifying a corporate bond portfolio does NOT consider:

A) domicile of the investor.

B) issuer.

C) quality.

D) maturity.

Answer: A

A broker/dealer's recommendations must be suitable for a customer and based on an individual's:

investment objectives.

financial background.

tax status.

A) I and II.

B) II and III.

C) I, II and III.

D) I only.

Answer: C

A 27-year-old client is in the lowest tax bracket and seeks an aggressive long-term growth investment. If his investment adviser representative recommends a high-rated general obligation municipal bond, the IAR has:

A) made an unsuitable recommendation, since a municipal revenue bond would have been more appropriate.

B) made an unsuitable recommendation based on the client's needs and objectives.

C) recommended a suitable investment because GOs are good long-term investments.

D) committed no violation because municipal bonds are well suited for the market's volatility.

Answer: B