Why Would a Broker Whom Is Engaged in Churning Be

question 24

Multiple Choice

Why would a broker whom is engaged in churning be at a conflict of interest with their client?

• A) Investing in risky securities is counter to the interest of a risk averse investor.
• B) The broker is trading to generate income for themselves and not returns for the investor.
• C) The broker isn't performing the due diligence necessary to provide accurate advice.
• D) The broker knows that the client has signed an agency contract agreeing not to sue.
• E) The broker is required to inform the client before buying securities created by their firm.

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Definitions:

Ambivalent/Resistant Attachment

A form of insecure attachment where children typically exhibit clinginess and difficulty being soothed but resist or reject the caregiver when they attempt to offer comfort or affection.

Secure Attachment

A bond between a child and caregiver characterized by trust and confidence, resulting from the caregiver's consistent response to the child's needs.

Anxious-Preoccupied Attachment

An attachment pattern characterized by dependency or "clinginess," not feeling worthy of love coupled with a fear of abandonment.

Sensorimotor Stage

The first of the four stages of cognitive development in Piaget's theory, spanning from birth to about 2 years of age, where infants learn through interacting with the environment using their senses and motor actions.