A customer calls his registered representative (RR) and asks her to buy shares of a company in his non-discretionary individual retirement account (IRA). The RR is permitted to:
Decide when to purchase the shares that day.
In a non-discretionary account, the registered representative (RR) can execute the customer's order but cannot make investment decisions on behalf of the customer. However, the RR is permitted to decide the timing of the purchase within the same trading day, provided the customer has given the order.
Investment management services imply a discretionary authority where the RR makes investment decisions for the customer. In a non-discretionary IRA, the RR cannot act on behalf of the customer without explicit consent for each transaction, thus this choice does not apply.
Holding the order for a future trading day would not align with the customer's request for immediate execution. In a non-discretionary account, the RR must act on the order as soon as practicable unless the customer specifies otherwise, making this option incorrect.
A margin account involves borrowing funds to purchase securities, which is not applicable in this situation as the customer is requesting a purchase in a non-discretionary IRA. Moreover, IRAs typically do not allow margin trading, rendering this choice invalid.
In a non-discretionary IRA, the registered representative can decide when to execute the customer’s order on the same trading day, reflecting the customer’s directive without altering the investment strategy. The other choices misinterpret the limitations of a non-discretionary account or violate IRA regulations, highlighting the importance of understanding account types and their respective authority levels in trading.
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