Series_63 Free Dumps Study Materials
Question 1: You are an investment adviser to Mr. Crochety, an elderly man who lives solely on his social
security
income although he managed to accumulate an investment portfolio worth about $100,000 over the
years.
Mr. Crochety recently got his hands on a business publication and read about the tax-free interest
paid by
municipal bonds. He calls you and instructs you to sell his other investments and invest all his money
in a
municipal bond portfolio, so that "the government doesn't get any more of my hard-earned money."
You
tell Mr. Crochety that you don't believe this is a wise move because he's in such a low tax bracket
that
municipal bonds are not a good investment for him, but he is insistent. Based on these facts, you
should
A. ignore Mr. Crochety's instruction since it is not in his best interest.
B. require Mr. Crochety to sign an affidavit of liability waiver, indicating that you will not be held
responsible for any adverse consequences of this decision.
C. have Mr. Crochety sign a statement of investment policy that indicates that this transaction is
being executed on the client's instructions and that you have advised the client against it.
D. call Mr. Crochety's relatives and suggest they have him examined for mental instability.
Correct Answer: C
Explanation: Given that you have advised Mr. Crochety that this is not a wise move and he still insists
on it,
you should protect yourself by getting it in writing. In no case, however, can you require a client to
sign an
affidavit of liability waver, nor can you refuse to follow his adamant instructions.