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

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What is the time limit for a dealer or broker to refund full concessions if a security is tendered for redemption?

5 business days
7 business days
10 business days
14 business days

The correct answer is: 7 business days

The correct answer is seven business days. In the context of securities and redemptions, brokers or dealers who offer concessions to clients upon the purchase of securities have a specific timeframe within which they are obligated to refund those concessions when a security is tendered for redemption. This requirement is designed to ensure that clients receive fair and equitable treatment in the event they decide to redeem their securities. The seven business days provide a standardized period that balances the need for transaction efficiency with regulatory oversight, ensuring that investors are not unduly delayed in receiving their concessions back after redemption. Understanding this timeframe helps ensure compliance with regulations that protect investors and maintain market integrity.