Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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Which of the following is a responsibility of a broker-dealer?

Underwriting new issues
Managing client portfolios
Conducting market research
Providing retirement planning services

The correct answer is: Underwriting new issues

A responsibility of a broker-dealer is underwriting new issues. This process involves a broker-dealer facilitating the issuance of new securities by helping companies raise capital in the financial markets. They can act as an intermediary between the issuer of the securities and the investors, ensuring that the newly issued securities are sold to the public. Underwriting is crucial for companies looking to go public or issue additional shares, as it provides them with the necessary capital while managing the associated risks. While managing client portfolios, conducting market research, and providing retirement planning services are important functions in the financial services industry, these activities are typically associated with investment advisers or financial planners rather than broker-dealers. Broker-dealers primarily focus on the buying and selling of securities, providing execution services, and underwriting new issues, while investment advisers go deeper into portfolio management and client financial planning.