Products & Their RisksQuestion 68 of 398
A registered representative recommends that a client invest $24,000, an amount just under a $25,000 breakpoint, so the transaction avoids reduced sales charges. This practice is known as:
a.Rights of accumulation
b.Breakpoint selling
c.Dollar-cost averaging
d.A combination privilege
Explanation
Breakpoint selling is the unethical practice of recommending a purchase just below a breakpoint threshold to earn a higher sales charge, depriving the client of a discount. It is a violation of FINRA rules. Rights of accumulation and combination privileges, by contrast, are legitimate ways to reach breakpoints.
Law Reference: FINRA Rule 2341Practice all 398 questions free — no signup required.
Related questions on this topic
- An investor wants to invest a modest amount for only about two to three years. Which share class is often most appropriate?
- A Letter of Intent in a mutual fund purchase allows an investor to:
- Breakpoints on Class A shares reduce the sales charge based on the size of the investment. Which of the following would typically qualify a purchase for a breakpoint discount?
- Shares of a closed-end investment company:
- Which statement correctly distinguishes a closed-end fund from an open-end fund?
- Which of the following is generally TRUE of an exchange-traded fund (ETF)?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review