General Securities Representative (Series 7) Practice Exam

What is the primary responsibility of a broker in the term "broker/dealer"?

1. Advising clients on investments

2. Underwriting new securities

3. Executing trades for client accounts

4. Managing customer accounts

The correct answer is: Executing trades for client accounts

In the context of "broker/dealer," the primary responsibility of a broker is to execute trades for client accounts. A broker acts as an intermediary between buyers and sellers, facilitating the purchase and sale of securities. This involves taking orders from clients, executing those orders on exchanges or through other market mechanisms, and ensuring that trades are completed in a timely manner. Executing trades is a fundamental aspect of a broker's role, as it directly relates to providing services to clients by enabling them to transact in the financial markets. While a broker may also engage in other activities like advising clients or managing accounts, the core function in the broker/dealer model hinges on the execution of trades, making it their primary responsibility. The other choices, such as advising clients on investments or managing customer accounts, represent additional functions that might be provided by brokers or financial advisors but do not capture the essence of what it means to be a broker in a transaction context. Underwriting new securities is typically associated with the dealer function, where the firm buys and sells securities on its own account, further distinguishing this role from that of a broker.