What term is used to describe a situation where clients give investment instructions to a firm without being given advice to do so?
Answer(s): B
The term execution only describes a situation where clients give investment instructions to a firm without receiving any advice. The firm simply executes the transaction on the client's behalf, with no assessment of suitability or recommendation provided.
How does a negative interest rate policy aim to boost lending?
Answer(s): D
A negative interest rate policy is designed to penalise banks for holding excess reserves with the central bank by charging them interest. This encourages banks to lend more to businesses and consumers instead of holding onto idle cash, thereby stimulating economic activity.
A fiduciary relationship normally arises between:
A fiduciary relationship typically exists between a lawyer and their client, where the lawyer is legally and ethically bound to act in the best interests of the client, with a duty of loyalty, care, and full disclosure.
Mortgage protection can assist when:
Answer(s): C
Mortgage protection is designed to cover mortgage payments in situations where the borrower is unable to work due to illness, accident, or unemployment. This ensures that the mortgage remains serviced even if the main wage earner temporarily loses income.
Establishing sufficient details about a client in order to give advice is known as:
Following Know Your Customer (KYC) procedures involves gathering sufficient details about a client - such as financial circumstances, investment goals, and risk tolerance - in order to ensure that any advice given is appropriate and compliant with regulatory requirements.
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