QUESTION 24 What is a correct response to the following statements: 1. Suitabili

Question

QUESTION 24 What is a correct response to the following statements: 1. Suitability means that a reasonable, informed investment professional would find a particular investment in a clients portfolio to be an appropriate investment for that particular client 2. Fiduciary means that a reasonable, informed investment professional would find a particular investment in a clients portfolio to be consistent with the return objective and the risk tolerance of the client O Both statements are correct. O The statement on suitability should also include consistency with a clients risk tolerance. The stateme nt on suitability should include consistency with both the return objective and the risk tolerance of the client. OThe statement on fiduciary should include the responsibility to act in a manner to keep the clients interest

Explanation / Answer

Answer is : Option D

The statement on fiduciary should include the responsibility to act in a manner to keep the clients interest first.

Explanation :

If we see the definition of 'Fiduciary' it itself defines the duties n obligations of the fiduciary person towards his principal i.e his client.

It says a fiduciary is a person or organization that owes to another the duties of good faith and trust. The highest legal duty of one party to another, it also involves being bound ethically to act in the other's best interests. A fiduciary's responsibilities or duties are both ethical and legal. When a party knowingly accepts a fiduciary duty on behalf of another party, he or she is required to act in the best interest of the principal, the party whose assets they are managing.

Therefore the last option line adds on the best described duties of a fiduciary person & hence that option has to be choosed.

The first sentence is already correct.

But the second needs to be changed as per the defination of it , so I would suggest to choose last option as the Answer.

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