Before a representative may exercise discretion in a customer's account, what is generally required?

Discretionary authority generally requires written customer authorization and firm acceptance or approval before discretionary trading occurs.

For a basic cash brokerage account, which signature is generally required on the new account form?

A standard new account form is signed by the representative and approved by a principal. Customer signatures are required for certain agreements, such as margin or options documents, not every cash account form.

Which documents are central to opening a margin account?

Margin accounts require documents covering the loan terms and pledge of securities as collateral. Loan consent is separate and generally optional.

Before a customer trades options, what is generally required?

Options trading requires account approval under the firm's options procedures and delivery of the Options Disclosure Document at or before approval.

A trustee wants to trade on margin, but the trust document is silent on margin. What is the key issue?

A trustee's authority comes from the trust document and fiduciary duties. Silence about margin or speculation can make the activity impermissible or unsuitable.

A corporation opens an account. What document usually identifies who may trade for the corporation?

A corporate resolution identifies authorized persons and may need to specify authority for activities such as margin or options trading.

What is the primary purpose of a transfer-on-death registration?

TOD registration directs account assets to named beneficiaries after death. It does not grant trading authority or guarantee returns.

In a joint tenants with right of survivorship account, what happens when one owner dies?

JTWROS includes survivorship. The deceased owner's interest generally passes to the surviving owner rather than through the deceased owner's estate.

Which fact is part of the customer profile used for suitability?

Investment objective, risk tolerance, time horizon, liquidity needs, tax status, income, net worth, and experience are core profile facts used for recommendations.

A third party wants to enter orders for a customer's account. What should the firm verify first?

A person entering orders for someone else's account needs proper authorization. Account ownership alone does not automatically give every third party trading authority.

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Public account drill

Series 7 Customer Accounts Practice Questions

Use these public sample questions to rehearse account registration, customer profile facts, discretionary authority, trading authorization, margin and options approval, fiduciary accounts, and transfers. These are educational examples, not actual FINRA exam questions.

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Topic summary

Customer account questions decide who can act, what must be approved, and which facts must be collected before a recommendation. Read the account type before reading the product.

Every question, answer choice, correct answer, and explanation on this page is public sample content. The private PassSeries7 mapped bank remains protected inside the paid product.

Common traps

Assuming verbal permission is enough for discretionary trading.
Treating account registration and trading authority as the same thing.
Forgetting that margin, options, and discretionary activity need special approval.
Skipping customer profile facts before evaluating suitability.

Public customer accounts sample questions

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Question 1 / 10
Customer accounts
Before a representative may exercise discretion in a customer's account, what is generally required?
Answer choices for question 1
Show answer and explanation
Correct answer: Written customer authorization and firm approval
Explanation: Discretionary authority generally requires written customer authorization and firm acceptance or approval before discretionary trading occurs.
Related: Discretionary accounts
Question 2 / 10
Customer accounts
For a basic cash brokerage account, which signature is generally required on the new account form?
Answer choices for question 2
Show answer and explanation
Correct answer: Registered representative and principal
Explanation: A standard new account form is signed by the representative and approved by a principal. Customer signatures are required for certain agreements, such as margin or options documents, not every cash account form.
Related: New account approval
Question 3 / 10
Customer accounts
Which documents are central to opening a margin account?
Answer choices for question 3
Show answer and explanation
Correct answer: Credit agreement and hypothecation agreement
Explanation: Margin accounts require documents covering the loan terms and pledge of securities as collateral. Loan consent is separate and generally optional.
Related: Margin account approval
Question 4 / 10
Customer accounts
Before a customer trades options, what is generally required?
Answer choices for question 4
Show answer and explanation
Correct answer: Options account approval and delivery of the ODD
Explanation: Options trading requires account approval under the firm's options procedures and delivery of the Options Disclosure Document at or before approval.
Related: Options approval context
Question 5 / 10
Customer accounts
A trustee wants to trade on margin, but the trust document is silent on margin. What is the key issue?
Answer choices for question 5
Show answer and explanation
Correct answer: Whether the trust document grants authority
Explanation: A trustee's authority comes from the trust document and fiduciary duties. Silence about margin or speculation can make the activity impermissible or unsuitable.
Related: Trust accounts
Question 6 / 10
Customer accounts
A corporation opens an account. What document usually identifies who may trade for the corporation?
Answer choices for question 6
Show answer and explanation
Correct answer: Corporate resolution
Explanation: A corporate resolution identifies authorized persons and may need to specify authority for activities such as margin or options trading.
Related: Corporate accounts
Question 7 / 10
Customer accounts
What is the primary purpose of a transfer-on-death registration?
Answer choices for question 7
Show answer and explanation
Correct answer: Transfer assets to named beneficiaries after death
Explanation: TOD registration directs account assets to named beneficiaries after death. It does not grant trading authority or guarantee returns.
Related: Beneficiary concepts
Question 8 / 10
Customer accounts
In a joint tenants with right of survivorship account, what happens when one owner dies?
Answer choices for question 8
Show answer and explanation
Correct answer: The surviving owner generally receives the deceased owner's interest
Explanation: JTWROS includes survivorship. The deceased owner's interest generally passes to the surviving owner rather than through the deceased owner's estate.
Related: Joint registrations
Question 9 / 10
Customer accounts
Which fact is part of the customer profile used for suitability?
Answer choices for question 9
Show answer and explanation
Correct answer: Investment objective
Explanation: Investment objective, risk tolerance, time horizon, liquidity needs, tax status, income, net worth, and experience are core profile facts used for recommendations.
Related: Customer profile facts
Question 10 / 10
Customer accounts
A third party wants to enter orders for a customer's account. What should the firm verify first?
Answer choices for question 10
Show answer and explanation
Correct answer: Valid trading authorization or power of attorney
Explanation: A person entering orders for someone else's account needs proper authorization. Account ownership alone does not automatically give every third party trading authority.
Related: Trading authority

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Series 7 Customer Accounts Practice Questions

Topic summary

Customer account questions decide who can act, what must be approved, and which facts must be collected before a recommendation. Read the account type before reading the product.

Every question, answer choice, correct answer, and explanation on this page is public sample content. The private PassSeries7 mapped bank remains protected inside the paid product.

Related Series 7 resources