Canadian Securities Course (CSC) Practice Exam · Question
A client requests to open a new investment account. What is the primary purpose of the 'Know Your Client' (KYC) rule?
The KYC rule requires registrants to gather essential information about a client to ensure that investment recommendations are suitable for their individual cir
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Question: A client requests to open a new investment account. What is the primary purpose of the 'Know Your Client' (KYC) rule?
Answer options: ✅ To ensure the proposed investments are suitable for the client.
- To verify the client's identity for anti-money laundering purposes.
- To collect sufficient information to assign a risk rating to the client.
- To establish a clear understanding of the client's financial goals and risk tolerance.
Correct answer: To ensure the proposed investments are suitable for the client.
Explanation: The KYC rule requires registrants to gather essential information about a client to ensure that investment recommendations are suitable for their individual circumstances, objectives, and risk tolerance.
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