Series 7 - General Securities Representative Exam

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Your client is too heavily concentrated in short term bonds in his IRA. There is a large equity rally underway. Your client is 52 years old and has a capital appreciation investment objective with a 14 year retirement time horizon. He wants to participate in the equity market rally. Which may be suitable for your client?

Class B shares of a growth fund
OTCQX issues
Short puts
Class A shares of a balanced fund


The best answer is Class B shares of a growth fund. He already has plenty of bonds in his existing holdings. Class B shares have no up front sales charge and could convert to Class A shares or have no sale charge after a 5 year holding period. 14 year time horizon means that class A load will cost him dearly. OTCQX issues are too speculative and short puts are too risky / inappropriate