Business PracticesQuestion 73 of 100
A customer instructs her agent to sell her entire position in a stock. The agent, believing the stock will rebound, sells only half. The agent has:
a.Acted prudently in the customer's best interest
b.Committed a prohibited practice by failing to follow the customer's instructions and effectively exercising unauthorized discretion
c.Acted properly because a partial sale is less risky
d.Acted properly if the stock later recovers
Explanation
Failing to execute a customer's order as instructed is an unethical practice, and substituting the agent's own judgment for the customer's amounts to unauthorized discretion. The agent may voice a contrary opinion but must ultimately follow the instruction or decline the account. A favorable market outcome does not retroactively excuse the deviation.
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