Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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Prepare for the Series 26 Exam with our comprehensive quiz. Enhance your understanding of investment companies and variable contracts products with detailed questions and explanations. Maximize your exam success!

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How long is the customer's account frozen after a sellout if payment is not made?

30 days
60 days
90 days
120 days

The correct answer is: 90 days

When a customer's account experiences a sellout due to non-payment, it is frozen for a specific duration to prevent further trading and avoid additional financial risk for both the brokerage and the customer. The correct response indicates that the customer's account is frozen for a period of 90 days following the sellout. This timeframe allows the brokerage firm to manage the consequences of the sellout, providing a buffer during which they can address the underlying issues that led to the non-payment. This policy serves to protect both the firm and other customers by ensuring that accounts with outstanding debts are not immediately reactivated for trading, which could lead to further complications or losses. Understanding this crucial aspect of trading and account management is essential for principals overseeing investment operations since the management of frozen accounts can impact the business's financial stability and customer relationships.