What Does the Model Code Recommend Regarding the Practice of "Name

question 254

Multiple Choice

What does the Model Code recommend regarding the practice of "name switching/substitution"?

• A) Dealers may seek a compensation payment in favor of the bank or an adjustment to brokerage bills from the broker for switching names.
• B) If requested by a broker to clear a transaction through name switching, a dealer must ensure that such activities have the prior approval of senior management.
• C) The practice of name switching/substitution is neither acceptable nor desirable.
• D) Name switching/substitution transactions should be executed as promptly as possible not considering credit limits and policy guidelines.

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Definitions:

Standards of Living

A measure of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Opportunity Costs

Eliminating possible positive outcomes from alternative selections by choosing one.

Worse Off

A situation or condition in which an individual or group is disadvantaged or in a less favorable position than before.

Opportunity Cost

The value of the next best alternative that one gives up when making a decision.