What is the right answer?
Which of the following statements is least accurate? It is permissible under the Standards to allocate trades:
A) on a pro rata basis over all suitable accounts based upon account value. B) on a pro rata basis over all suitable accounts on the basis of an advance indication of interest and indicated order size. C) on a pro rata basis over all accounts.
i thnik a
C)
You may not allocate to accounts for which an investment is unsuitable, so allocating to _ all _ accounts may be impermissible.
I think B.
thanks, the right answer was c, made a lot more sense when you said it than the answer provided, which was Allocating trades on a pro rata basis, pro rata based upon order size (when there are too few shares to fill all orders, e.g., filling 2/3 of all orders actually submitted), or pro rata based upon an advance indication of interest are all permissible. However, accounts must be checked for suitability.
basically gave the main reason as an aside, after saying that allocating trades on a pro rata basis was permissible. so easy to misunderstand these answers.
C is definitely the least accurate answer. You only allocate shares to suitable accounts.