Excessively Trading a Customers Account to Increase a Stockbrokers Commission

question 122

Multiple Choice

Excessively trading a customers account to increase a stockbrokers commission income is

• A) an acceptable method of timing the market to increase rates of return.
• B) called churning which is an illegal practice.
• C) probably unethical but yet is acceptable by the securities industry.
• D) permitted provided that the customer does not object.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, reflecting the earnings of the company distributed among its shareholders.

Dividend Yield

This ratio in finance shows the comparison between a company's annual dividend payout and its stock price.

Dividend Income

Earnings received from owning shares of a company that pays dividends.

Shares

Shares represent portions of equity in a company or an investment, entitling holders to a proportional share of any distributed profits, known as dividends, when they are announced.